{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-personal-funds-borrowed-against-assets-not-being-acquired-count-as-my-equity-injection","api_url":"https://dealroom.so/api/public/questions/can-personal-funds-borrowed-against-assets-not-being-acquired-count-as-my-equity-injection","question":"Can personal funds borrowed against assets not being acquired count as my equity injection?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"Generally, no, funds borrowed against assets that are not part of the business being acquired and not personally owned by the borrower typically cannot count as equity injection. The injection must be from unencumbered personal funds.","rule":"SBA requires that the equity injection be from the personal resources of the borrower. Funds that are borrowed, even against personal assets, are typically considered debt and not true equity. The funds must represent the borrower's ownership stake and commitment.","example":"If you take out a $50,000 personal loan against a car title to fund your equity, the lender would likely disallow this, as it is borrowed money, not unencumbered personal equity.","what_lenders_check":"Lenders are careful to ensure the equity injection is not funded by debt, as this dilutes the borrower's true equity stake and increases overall leverage. They will scrutinize the source of all funds for the injection.","required_facts":["Borrowed funds","Personal assets","Unencumbered equity","Borrower commitment"],"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":"Can I use retirement funds from a 401(k) as equity injection for a $750,000 business purchase?","url":"https://dealroom.so/sba-7a/questions/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-7a/questions/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-7a/questions/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-7a/questions/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-7a/questions/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-7a/questions/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":"Borrowed funds","url":"https://dealroom.so/glossary/borrowed-funds"},{"term":"Borrowed Equity","url":"https://dealroom.so/glossary/borrowed-equity"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Undisclosed Borrowed Equity","url":"https://dealroom.so/glossary/undisclosed-borrowed-equity"},{"term":"Personal Assets","url":"https://dealroom.so/glossary/personal-assets"}],"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-personal-funds-borrowed-against-assets-not-being-acquired-count-as-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."]}