{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-sweat-equity-or-future-services-i-provide-to-the-business-count-towards-the-required-e","api_url":"https://dealroom.so/api/public/questions/can-sweat-equity-or-future-services-i-provide-to-the-business-count-towards-the-required-e","question":"Can sweat equity or future services I provide to the business count towards the required equity injection?","topic":"What counts toward the 10%","audience":"borrower","bot_mode":"buyer","short_answer":"No, sweat equity or future services provided by the buyer cannot be counted towards the required minimum equity injection for an SBA 7(a) loan.","rule":"The SBA requires that equity injection be in the form of cash, unencumbered tangible assets, or a fully subordinated seller note. Sweat equity, which represents future effort or intangible value, is not a quantifiable, liquid contribution at the time of closing and therefore does not meet the SBA's requirements for equity injection. The purpose of equity is to demonstrate the borrower's capital at risk.","example":"A buyer for a $400,000 business offers to work for free for the first six months to make up their $40,000 equity injection. The lender will reject this, requiring actual cash or eligible assets for the equity.","what_lenders_check":"Lenders strictly adhere to SBA guidelines regarding eligible forms of equity. They ensure all equity contributions are verifiable and meet the 'unencumbered' and 'at-risk' criteria, which sweat equity does not.","required_facts":["Sweat equity","Future services","Ineligible equity","Cash contribution","Tangible assets"],"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 renovation costs for an acquired business premises count towards my required 10% equity injection?","url":"https://dealroom.so/sba-7a/questions/can-renovation-costs-for-an-acquired-business-premises-count-towards-my-required-10-equity"},{"question":"Can the fair market value of equipment I already own and contribute to the acquired business count towards my equity?","url":"https://dealroom.so/sba-7a/questions/can-the-fair-market-value-of-equipment-i-already-own-and-contribute-to-the-acquired-busine"},{"question":"Are pre-closing legal and accounting fees eligible to be counted towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/are-pre-closing-legal-and-accounting-fees-eligible-to-be-counted-towards-my-equity-injecti"},{"question":"Besides cash, what non-cash assets can I contribute to meet the 10% equity injection for an $800,000 acquisition?","url":"https://dealroom.so/sba-7a/questions/besides-cash-what-non-cash-assets-can-i-contribute-to-meet-the-10-equity-injection-for-an-"},{"question":"Can a substantial pre-paid rent deposit on a commercial lease count towards the equity injection for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/can-a-substantial-pre-paid-rent-deposit-on-a-commercial-lease-count-towards-the-equity-inj"},{"question":"If I contribute existing equipment valued at $50,000 to the acquired business, can it count towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/if-i-contribute-existing-equipment-valued-at-50-000-to-the-acquired-business-can-it-count-"}],"related_terms":[{"term":"Sweat equity","url":"https://dealroom.so/glossary/sweat-equity"},{"term":"Trade or business","url":"https://dealroom.so/glossary/trade-or-business"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Shared Services","url":"https://dealroom.so/glossary/shared-services"},{"term":"Required guarantor","url":"https://dealroom.so/glossary/required-guarantor"},{"term":"Alienate the Business","url":"https://dealroom.so/glossary/alienate-the-business"}],"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-sweat-equity-or-future-services-i-provide-to-the-business-count-towards-the-required-e","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."]}