{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/can-i-use-funds-from-a-friend-as-equity-for-my-sba-7-a-loan","api_url":"https://dealroom.so/api/public/questions/can-i-use-funds-from-a-friend-as-equity-for-my-sba-7-a-loan","question":"Can I use funds from a friend as equity for my SBA 7(a) loan?","topic":"Down payment & Equity","audience":"new","bot_mode":"buyer","short_answer":"Yes, funds from a friend can count towards your equity injection, provided they are structured as a gift or an eligible subordinated loan with no repayment during the SBA loan's full standby period.","rule":"Gifted funds from non-family members are generally acceptable if the gift is unconditional, properly documented, and there's no expectation of repayment. If it's a loan, it must be on full standby, meaning no payments (principal or interest) can be made until the SBA loan is fully repaid.","example":"A friend gives you $50,000 as an unconditional gift for your business purchase. This would count as equity. If the friend \"lends\" you $50,000, it must be fully subordinated to the SBA loan, with no payments until the SBA loan is satisfied, to be considered equity.","what_lenders_check":"Lenders will meticulously verify the source and terms of any third-party funds used for equity. They ensure gifts are truly unconditional and that subordinated loans meet the strict \"full standby\" requirements to prevent any claims on the business's cash flow ahead of the SBA loan.","required_facts":["Gift funds","Unconditional gift","Subordinated loan","Full standby required","Source verification"],"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":"What is the minimum equity injection (down payment) for an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/what-is-the-minimum-equity-injection-down-payment-for-an-sba-7-a-loan"},{"question":"Can I use a gift from my parents for my SBA 7(a) loan down payment?","url":"https://dealroom.so/sba-loans/basics/can-i-use-a-gift-from-my-parents-for-my-sba-7-a-loan-down-payment"},{"question":"Can gift funds from a non-U.S. relative count towards my SBA 7(a) down payment?","url":"https://dealroom.so/sba-loans/basics/can-gift-funds-from-a-non-u-s-relative-count-towards-my-sba-7-a-down-payment"}],"related_terms":[{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"SBA 7(a) Loan Program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"},{"term":"SBA 7(a) loan guaranty","url":"https://dealroom.so/glossary/sba-7-a-loan-guaranty"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"Standard 7(a) loan","url":"https://dealroom.so/glossary/standard-7-a-loan"}],"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-funds-from-a-friend-as-equity-for-my-sba-7-a-loan","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."]}