{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/can-i-use-a-personal-loan-from-a-relative-for-my-equity-injection","api_url":"https://dealroom.so/api/public/questions/can-i-use-a-personal-loan-from-a-relative-for-my-equity-injection","question":"Can I use a personal loan from a relative for my equity injection?","topic":"Down Payment & Equity","audience":"new","bot_mode":"buyer","short_answer":"No, generally a personal loan from a relative cannot be used for the equity injection (down payment) for an SBA 7(a) loan unless it is placed on full standby for the entire term of the SBA loan.","rule":"Any funds used for equity injection must typically be unencumbered and not subject to repayment during the life of the SBA loan. A loan, even from a relative, creates a debt obligation. To qualify, such a loan would need to be formally subordinated to the SBA loan and placed on \"full standby,\" meaning no principal or interest payments can be made until the SBA loan is fully repaid.","example":"David receives a $75,000 loan from his uncle for his equity injection. The lender informs David that this loan cannot count unless his uncle signs a full standby agreement, legally prohibiting any payments to the uncle until the SBA 7(a) loan is paid off.","what_lenders_check":"Lenders are highly cautious about any borrowed funds used for equity injection. They meticulously review standby agreements to ensure they meet strict SBA requirements, preventing any competing claims on the borrower's cash flow or assets during the SBA loan term.","required_facts":["Personal loan","Relative","Equity injection","Full standby","Subordination"],"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","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":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"},{"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":"What is the typical cash down payment required for an SBA 7(a) business acquisition?","url":"https://dealroom.so/sba-loans/basics/what-is-the-typical-cash-down-payment-required-for-an-sba-7-a-business-acquisition"},{"question":"Can personal savings be used as a down payment for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/can-personal-savings-be-used-as-a-down-payment-for-an-sba-7-a-loan"},{"question":"What is the typical down payment percentage required for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-is-the-typical-down-payment-percentage-required-for-an-sba-7-a-loan"},{"question":"Can I use gifted funds from my parents for the down payment on an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/can-i-use-gifted-funds-from-my-parents-for-the-down-payment-on-an-sba-7-a-loan"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-loans/basics/can-i-use-a-personal-loan-from-a-relative-for-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."]}