{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-home-equity-line-of-credit-be-used-for-the-down-payment","api_url":"https://dealroom.so/api/public/questions/can-funds-from-a-home-equity-line-of-credit-be-used-for-the-down-payment","question":"Can funds from a home equity line of credit be used for the down payment?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"No, funds borrowed from a home equity line of credit (HELOC) or any other borrowed funds generally cannot be used for the SBA 7(a) equity injection.","rule":"The SBA requires the equity injection to be from the borrower's unencumbered personal resources. Funds acquired through a loan, such as a HELOC, are considered borrowed funds and do not count towards the required equity as they introduce additional debt.","example":"A buyer cannot use $75,000 drawn from their home equity line as part of their $100,000 required cash injection for a business purchase.","what_lenders_check":"Lenders are diligent in ensuring the equity injection is truly from unencumbered personal funds. Using borrowed money for equity injection goes against the SBA's policy of reducing overall leverage and demonstrating borrower commitment.","required_facts":[],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","SBA Form 1919 - Borrower Information Form","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":"SBA Form 1919 - Borrower Information Form","url":"https://www.sba.gov/sites/default/files/2025-03/2025.02.27%20Form%201919%20-%20Updates%20%28FINAL%29_03-12-2025%20%281%29.pdf"},{"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 I use retirement funds from a 401(k) as equity injection for a $750,000 business purchase?","url":"https://dealroom.so/sba-7a/questions/can-i-use-retirement-funds-from-a-401-k-as-equity-injection-for-a-750-000-business-purchas"},{"question":"Can funds from a home equity line of credit (HELOC) be used as my equity injection for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/can-funds-from-a-home-equity-line-of-credit-heloc-be-used-as-my-equity-injection-for-a-bus"},{"question":"Is it possible to use a second mortgage on my personal residence as an equity injection for a $1.5 million business acquisition?","url":"https://dealroom.so/sba-7a/questions/is-it-possible-to-use-a-second-mortgage-on-my-personal-residence-as-an-equity-injection-fo"},{"question":"How much cash must I personally inject for an SBA 7(a) business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-much-cash-must-i-personally-inject-for-an-sba-7-a-business-acquisition"},{"question":"What are the acceptable sources for my cash equity injection beyond personal savings?","url":"https://dealroom.so/sba-7a/questions/what-are-the-acceptable-sources-for-my-cash-equity-injection-beyond-personal-savings"},{"question":"What is the SBA's minimum required equity injection percentage for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/what-is-the-sba-s-minimum-required-equity-injection-percentage-for-a-business-acquisition"}],"related_terms":[{"term":"Home equity line of credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"term":"Down payment","url":"https://dealroom.so/glossary/down-payment"},{"term":"Home equity","url":"https://dealroom.so/glossary/home-equity"},{"term":"Line of credit","url":"https://dealroom.so/glossary/line-of-credit"},{"term":"Credit Line","url":"https://dealroom.so/glossary/credit-line"},{"term":"Existing Line of Credit","url":"https://dealroom.so/glossary/existing-line-of-credit"}],"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-funds-from-a-home-equity-line-of-credit-be-used-for-the-down-payment","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."]}