{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-third-party-loan-not-from-the-seller-count-towards-the-minimum-equity-injection","api_url":"https://dealroom.so/api/public/questions/can-a-third-party-loan-not-from-the-seller-count-towards-the-minimum-equity-injection","question":"Can a third-party loan, not from the seller, count towards the minimum equity injection?","topic":"What counts toward the 10%","audience":"borrower","bot_mode":"buyer","short_answer":"No, a third-party loan, even if not from the seller, cannot count towards the minimum equity injection for an SBA 7(a) loan. Equity must be unencumbered funds that are truly 'at risk' in the business.","rule":"An equity injection must represent the borrower's contribution of capital free of any lien or repayment obligation that would affect the business's ability to repay the SBA loan. Any third-party loan creates a debt that must be serviced, making the funds encumbered and therefore ineligible as true equity.","example":"If you obtain a $40,000 personal loan from a friend or a private lender to make your down payment on a $400,000 business purchase, this $40,000 would not count towards your required equity injection. It would be considered a separate debt.","what_lenders_check":"Lenders need to ensure that the borrower's financial capacity is not overleveraged with additional debt. They will carefully review all sources of funds for the down payment to ensure they meet the unencumbered equity requirements.","required_facts":["Third-party loan","Not eligible equity","Unencumbered funds","Repayment obligation","Debt burden"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"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":"Can a substantial pre-paid rent deposit on a commercial lease count towards the equity injection for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/can-a-substantial-pre-paid-rent-deposit-on-a-commercial-lease-count-towards-the-equity-inj"}],"related_terms":[{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"},{"term":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"term":"Third-party loan","url":"https://dealroom.so/glossary/third-party-loan"},{"term":"Third-Party Equity Investments","url":"https://dealroom.so/glossary/third-party-equity-investments"},{"term":"Minimum cash injection","url":"https://dealroom.so/glossary/minimum-cash-injection"},{"term":"Equity injection","url":"https://dealroom.so/glossary/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-third-party-loan-not-from-the-seller-count-towards-the-minimum-equity-injection","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."]}