{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/can-i-use-a-loan-from-someone-else-for-my-down-payment","api_url":"https://dealroom.so/api/public/questions/can-i-use-a-loan-from-someone-else-for-my-down-payment","question":"Can I use a loan from someone else for my down payment?","topic":"Down payment & equity injection","audience":"new","bot_mode":"buyer","short_answer":"Generally, no. Borrowed funds cannot be used for the required equity injection unless they are on \"full standby\" or meet specific, very limited exceptions.","rule":"Funds for the required equity injection must typically be unencumbered and come from the borrower's own resources, or from a gift with no repayment terms, or from seller financing on \"full standby.\" Borrowed funds that require repayment during the term of the SBA loan are usually not allowed as equity because they create additional debt service, weakening the borrower's ability to repay the SBA loan.","example":"If a borrower receives a $30,000 loan from a friend for their down payment, and this loan requires monthly payments, it would not count towards the equity injection. The lender would require the borrower to find other, eligible sources for their down payment.","what_lenders_check":"Lenders scrutinize the source of all equity injection funds to ensure they are not borrowed funds with repayment obligations. This verification is crucial to ensure the borrower's true equity stake and ability to service the SBA loan.","required_facts":["Borrowed funds ineligible","Full standby exception","No repayment terms","Equity must be unencumbered"],"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","FAQ Related to Recent SBA Procedural Notices"],"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"},{"title":"FAQ Related to Recent SBA Procedural Notices","url":"https://www.sba.gov/sites/default/files/2026-04/Info%20Notice%20-%20Guidance%20for%20Frequently%20Asked%20Questions%20Related%20to%20Recent%20Procedural%20Notices%20%28FINA.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-loans/basics/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-loans/basics/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-loans/basics/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-loans/basics/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-loans/basics/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-loans/basics/what-is-the-sba-s-minimum-required-equity-injection-percentage-for-a-business-acquisition"}],"related_terms":[{"term":"Down payment","url":"https://dealroom.so/glossary/down-payment"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Demand for Payment","url":"https://dealroom.so/glossary/demand-for-payment"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"},{"term":"Tangible Equity Injection","url":"https://dealroom.so/glossary/tangible-equity-injection"},{"term":"Hidden Equity Injection","url":"https://dealroom.so/glossary/hidden-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-someone-else-for-my-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."]}