{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/can-i-use-a-loan-from-a-non-sba-lender-as-part-of-my-equity-injection","api_url":"https://dealroom.so/api/public/questions/can-i-use-a-loan-from-a-non-sba-lender-as-part-of-my-equity-injection","question":"Can I use a loan from a non-SBA lender as part of my equity injection?","topic":"What the down payment is","audience":"new","bot_mode":"buyer","short_answer":"Generally, no, funds that are borrowed to make the equity injection (down payment) are typically not allowed for an SBA 7(a) loan, as the equity must be 'unencumbered.'","rule":"The SBA requires the equity injection to be from the borrower's own unencumbered resources. This means the funds should not be borrowed, as borrowing for the down payment increases the borrower's overall debt burden and dilutes their 'at-risk' capital. There are very limited exceptions, but typically, a loan used for the down payment would be viewed as additional debt that makes the business less creditworthy.","example":"An entrepreneur secures a $50,000 personal loan from a credit union, planning to use it for the 10% down payment on a $500,000 business acquisition. An SBA lender would likely deem these funds ineligible for the equity injection because they constitute borrowed money, thereby increasing the borrower's financial leverage and risk.","what_lenders_check":"Lenders meticulously verify the source of the equity injection to ensure it is not borrowed funds. If the down payment is sourced from another loan, it undermines the purpose of the equity injection, which is to demonstrate the borrower's personal financial commitment and reduce the overall debt-to-equity ratio.","required_facts":["Borrowed funds","Unencumbered cash","Equity injection source","Debt burden"],"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 is the borrower's down payment amount calculated for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/how-is-the-borrower-s-down-payment-amount-calculated-for-an-sba-7-a-loan"},{"question":"What non-cash forms of equity injection are acceptable for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-non-cash-forms-of-equity-injection-are-acceptable-for-an-sba-7-a-loan"}],"related_terms":[{"term":"Non-Cash Equity Injection","url":"https://dealroom.so/glossary/non-cash-equity-injection"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Use of Loan Proceeds","url":"https://dealroom.so/glossary/use-of-loan-proceeds"},{"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-loans/basics/can-i-use-a-loan-from-a-non-sba-lender-as-part-of-my-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."]}