{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/can-funds-from-a-personal-line-of-credit-secured-by-non-personal-real-estate-be-equity-inj","api_url":"https://dealroom.so/api/public/questions/can-funds-from-a-personal-line-of-credit-secured-by-non-personal-real-estate-be-equity-inj","question":"Can funds from a personal line of credit secured by non-personal real estate be equity injection?","topic":"Equity Injection Verification","audience":"lender","bot_mode":"lender","short_answer":"No, funds from a personal line of credit (LOC) secured by non-personal real estate typically cannot be used as equity injection for a 7(a) loan. Equity injection funds must generally be unencumbered and sourced from the borrower's own liquid assets or true equity, not borrowed funds that create new debt.","rule":"SBA defines eligible equity injection as unencumbered cash or assets owned by the borrower, free and clear of liens, that contribute to the project. Funds obtained from a personal LOC are considered borrowed funds and therefore create a new liability for the borrower, which is contrary to the purpose of equity injection to reduce the overall debt burden.","example":"A borrower takes out a $50,000 personal LOC secured by an investment property they own and attempts to use these funds as their equity injection. The lender would identify these as ineligible for equity injection because they represent borrowed funds, not unencumbered owner capital.","what_lenders_check":"Lenders must carefully scrutinize the source of all equity injection funds. Accepting borrowed funds as equity injection, especially from an LOC, creates undisclosed debt for the borrower and is a fundamental non-compliance that can lead to a repair or denial of the SBA guaranty.","required_facts":["Borrowed funds","Personal LOC","Non-personal real estate","Unencumbered funds","New debt"],"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":"How does a lender verify equity injection funds originating from a newly established business bank account?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-equity-injection-funds-originating-from-a-newly-established-busin"},{"question":"Can a borrower's investment in leasehold improvements prior to loan closing count towards the equity injection?","url":"https://dealroom.so/for-lenders/questions/can-a-borrower-s-investment-in-leasehold-improvements-prior-to-loan-closing-count-towards-"},{"question":"What specific documentation is required to verify the source of gifted equity injection funds from a foreign family member?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-to-verify-the-source-of-gifted-equity-injection-fu"},{"question":"If a borrower contributes equipment as equity, how does the lender verify its fair market value?","url":"https://dealroom.so/for-lenders/questions/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v"},{"question":"What specific conditions must a personal loan from a non-owner family member meet to count as equity injection for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-conditions-must-a-personal-loan-from-a-non-owner-family-member-meet-to-count"},{"question":"How does a lender verify the source of gifted equity injection funds from a foreign national?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-the-source-of-gifted-equity-injection-funds-from-a-foreign-nation"}],"related_terms":[{"term":"Secured Personal Line of Credit","url":"https://dealroom.so/glossary/secured-personal-line-of-credit"},{"term":"Personal line of credit","url":"https://dealroom.so/glossary/personal-line-of-credit"},{"term":"Personal real estate","url":"https://dealroom.so/glossary/personal-real-estate"},{"term":"Real estate secured loans","url":"https://dealroom.so/glossary/real-estate-secured-loans"},{"term":"Home equity line of credit","url":"https://dealroom.so/glossary/home-equity-line-of-credit"},{"term":"Line of credit","url":"https://dealroom.so/glossary/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/for-lenders/questions/can-funds-from-a-personal-line-of-credit-secured-by-non-personal-real-estate-be-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."]}