{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-substantial-pre-paid-rent-deposit-on-a-commercial-lease-count-towards-the-equity-inj","api_url":"https://dealroom.so/api/public/questions/can-a-substantial-pre-paid-rent-deposit-on-a-commercial-lease-count-towards-the-equity-inj","question":"Can a substantial pre-paid rent deposit on a commercial lease count towards the equity injection for a business acquisition?","topic":"What counts toward the 10%","audience":"borrower","bot_mode":"buyer","short_answer":"No, a pre-paid rent deposit for a commercial lease typically cannot count towards the required equity injection for an SBA 7(a) loan.","rule":"Equity injection must be unencumbered funds or assets contributed directly to the business by the borrower. A pre-paid rent deposit is generally considered an expense, or an asset of the business (prepaid expense), but not a direct capital contribution that meets the SBA's definition of equity injection from the borrower's personal resources.","example":"If you plan to pre-pay six months of rent totaling $30,000 as part of acquiring a business, this $30,000 will be considered a business expense or an asset on the balance sheet, but it cannot be counted as part of your personal equity injection.","what_lenders_check":"Lenders classify expenses and balance sheet assets carefully. Equity injection must come from the borrower's own unencumbered funds or eligible assets, not from operational outlays or working capital that the loan itself might fund.","required_facts":["Pre-paid rent","Not equity injection","Business expense","Unencumbered funds"],"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":[{"question":"Can renovation costs for an acquired business premises count towards my required 10% equity injection?","url":"https://dealroom.so/sba-7a/questions/can-renovation-costs-for-an-acquired-business-premises-count-towards-my-required-10-equity"},{"question":"Can the fair market value of equipment I already own and contribute to the acquired business count towards my equity?","url":"https://dealroom.so/sba-7a/questions/can-the-fair-market-value-of-equipment-i-already-own-and-contribute-to-the-acquired-busine"},{"question":"Can sweat equity or future services I provide to the business count towards the required equity injection?","url":"https://dealroom.so/sba-7a/questions/can-sweat-equity-or-future-services-i-provide-to-the-business-count-towards-the-required-e"},{"question":"Are pre-closing legal and accounting fees eligible to be counted towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/are-pre-closing-legal-and-accounting-fees-eligible-to-be-counted-towards-my-equity-injecti"},{"question":"Besides cash, what non-cash assets can I contribute to meet the 10% equity injection for an $800,000 acquisition?","url":"https://dealroom.so/sba-7a/questions/besides-cash-what-non-cash-assets-can-i-contribute-to-meet-the-10-equity-injection-for-an-"},{"question":"If I contribute existing equipment valued at $50,000 to the acquired business, can it count towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/if-i-contribute-existing-equipment-valued-at-50-000-to-the-acquired-business-can-it-count-"}],"related_terms":[{"term":"Pre-paid lease","url":"https://dealroom.so/glossary/pre-paid-lease"},{"term":"Pre-Paid Expenses","url":"https://dealroom.so/glossary/pre-paid-expenses"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Commercial lease agreement","url":"https://dealroom.so/glossary/commercial-lease-agreement"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"},{"term":"Tangible Equity Injection","url":"https://dealroom.so/glossary/tangible-equity-injection"}],"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":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-substantial-pre-paid-rent-deposit-on-a-commercial-lease-count-towards-the-equity-inj","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."]}