{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-i-use-a-portion-of-the-business-s-existing-cash-on-hand-at-closing-towards-my-equity-i","api_url":"https://dealroom.so/api/public/questions/can-i-use-a-portion-of-the-business-s-existing-cash-on-hand-at-closing-towards-my-equity-i","question":"Can I use a portion of the business's existing cash on hand at closing towards my equity injection, if it's not from the seller?","topic":"What counts toward 10%","audience":"borrower","bot_mode":"buyer","short_answer":"No, existing cash on hand within the business being acquired cannot be counted towards the buyer's equity injection, regardless of its source.","rule":"Equity injection must be new capital brought into the business by the buyer. Existing cash within the business is considered an asset of the business itself, not a new contribution from the buyer, and therefore cannot fulfill the equity injection requirement. The purpose of the injection is to demonstrate the buyer's financial commitment and reduce the overall loan-to-value.","example":"A buyer is acquiring a business for $700,000. The business has $50,000 in its operating account at closing. The buyer still needs to contribute a minimum of $70,000 (10%) from their personal funds or other eligible sources, as the $50,000 is a business asset.","what_lenders_check":"Lenders verify that all equity injection funds are from external sources provided by the buyer. They review the business's financial statements and bank accounts to ensure no existing cash is misrepresented as new equity, which could lead to an SBA guaranty repair.","required_facts":["Existing cash","Not new capital","Not equity injection","Business asset","Buyer contribution"],"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":"If the seller holds a minority stake (e.g., 5%) after the acquisition, does their retained equity count towards my 10% injection?","url":"https://dealroom.so/sba-7a/questions/if-the-seller-holds-a-minority-stake-e-g-5-after-the-acquisition-does-their-retained-equit"}],"related_terms":[{"term":"Call on the guaranty","url":"https://dealroom.so/glossary/call-on-the-guaranty"},{"term":"Use of funds","url":"https://dealroom.so/glossary/use-of-funds"},{"term":"Use of proceeds","url":"https://dealroom.so/glossary/use-of-proceeds"},{"term":"Alienate the Business","url":"https://dealroom.so/glossary/alienate-the-business"},{"term":"Claim on the SBA Guarantee","url":"https://dealroom.so/glossary/claim-on-the-sba-guarantee"},{"term":"Unguaranteed portion","url":"https://dealroom.so/glossary/unguaranteed-portion"}],"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-7a/questions/can-i-use-a-portion-of-the-business-s-existing-cash-on-hand-at-closing-towards-my-equity-i","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."]}