{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-i-use-a-conditional-grant-from-a-local-economic-development-agency-as-equity","api_url":"https://dealroom.so/api/public/questions/can-i-use-a-conditional-grant-from-a-local-economic-development-agency-as-equity","question":"Can I use a conditional grant from a local economic development agency as equity?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"It depends; a grant may count towards the equity injection if it is non-repayable and not conditioned on the SBA loan approval itself.","rule":"Funds from a grant can qualify as equity if they are truly unencumbered and do not create new debt for the business or the borrower. The SBA scrutinizes any conditions attached to the grant to ensure it aligns with equity injection requirements.","example":"A buyer secures a $25,000 grant from a city program contingent on creating five new jobs within a year. If this grant is non-repayable, it can be considered towards the equity injection for a $400,000 business acquisition.","what_lenders_check":"Lenders verify that the grant is fully disbursed or irrevocably committed, truly non-repayable, and that its conditions do not conflict with the SBA loan terms or add undue risk. Documentation of the grant agreement is critical.","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"],"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"}],"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":"Economic Development Agency","url":"https://dealroom.so/glossary/economic-development-agency"},{"term":"Down payment","url":"https://dealroom.so/glossary/down-payment"},{"term":"Grant","url":"https://dealroom.so/glossary/grant"},{"term":"Conditional guaranty","url":"https://dealroom.so/glossary/conditional-guaranty"},{"term":"Federal grant","url":"https://dealroom.so/glossary/federal-grant"},{"term":"Conditional approval","url":"https://dealroom.so/glossary/conditional-approval"}],"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-i-use-a-conditional-grant-from-a-local-economic-development-agency-as-equity","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."]}