{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-short-term-personal-loan-from-a-relative-repaid-before-closing-count-as-my-equity-in","api_url":"https://dealroom.so/api/public/questions/can-a-short-term-personal-loan-from-a-relative-repaid-before-closing-count-as-my-equity-in","question":"Can a short-term personal loan from a relative, repaid before closing, count as my equity injection?","topic":"Equity Injection Source","audience":"borrower","bot_mode":"buyer","short_answer":"No, a short-term personal loan from a relative, even if repaid before closing, typically cannot be considered your unencumbered equity injection if the original source was borrowed.","rule":"The SBA requires equity injection funds to be \"unencumbered,\" meaning they cannot be borrowed. Even if a short-term loan is repaid, the original source of the funds used for the injection would still be considered borrowed and therefore ineligible, unless the repayment demonstrably came from other unencumbered sources.","example":"If a relative loans you $50,000 which you then use for your equity, and you repay the relative with funds from another borrowed source before closing, the $50,000 is still considered borrowed and won't count. If you repaid them with unencumbered personal savings, that would be different.","what_lenders_check":"Lenders conduct thorough source-of-funds verification, requiring bank statements over several months to \"season\" the funds. They are specifically looking for evidence that the equity is truly from the borrower's unencumbered resources and not from a hidden loan.","required_facts":["Borrowed funds","Equity unencumbered","Source of funds","Repayment source"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[],"related_terms":[{"term":"Short-Term Conventional Loan","url":"https://dealroom.so/glossary/short-term-conventional-loan"},{"term":"Short-Term Asset","url":"https://dealroom.so/glossary/short-term-asset"},{"term":"Short-term liquidity","url":"https://dealroom.so/glossary/short-term-liquidity"},{"term":"Term loan","url":"https://dealroom.so/glossary/term-loan"},{"term":"Loan Term","url":"https://dealroom.so/glossary/loan-term"},{"term":"Personal loan","url":"https://dealroom.so/glossary/personal-loan"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-short-term-personal-loan-from-a-relative-repaid-before-closing-count-as-my-equity-in","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}