{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-the-fair-market-value-of-raw-materials-i-contribute-to-the-acquired-business-count-tow","api_url":"https://dealroom.so/api/public/questions/can-the-fair-market-value-of-raw-materials-i-contribute-to-the-acquired-business-count-tow","question":"Can the fair market value of raw materials I contribute to the acquired business count towards equity?","topic":"What counts toward the 10%","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, the fair market value of raw materials that are essential for the business's operations and transferred to the acquired entity can potentially count as part of the equity injection.","rule":"Non-cash assets, such as inventory or raw materials, can be counted as part of the equity injection if their fair market value is properly substantiated by an independent appraisal or other acceptable method. These assets must be contributed to the new business entity and be essential to its operation.","example":"If a buyer is acquiring a manufacturing business for $800,000 and has $50,000 in raw materials directly applicable to the business, an independent appraisal valuing these materials at $40,000 could allow that $40,000 to count towards the required $80,000 (10%) equity, alongside a $40,000 cash injection.","what_lenders_check":"Lenders will require an independent valuation of the raw materials to ensure their fair market value is accurately assessed. They also confirm that these materials are directly related to the acquired business's operations and are truly contributed to the new entity.","required_facts":["Non-cash equity","Raw materials","Fair market value","Independent appraisal","Business necessity"],"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"],"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"}],"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":"Can sweat equity or future services I provide to the business count towards the required equity injection?","url":"https://dealroom.so/sba-7a/questions/can-sweat-equity-or-future-services-i-provide-to-the-business-count-towards-the-required-e"},{"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"}],"related_terms":[{"term":"Business Fair Market Value","url":"https://dealroom.so/glossary/business-fair-market-value"},{"term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"},{"term":"Net fair market value","url":"https://dealroom.so/glossary/net-fair-market-value"},{"term":"Lower of cost or fair market value","url":"https://dealroom.so/glossary/lower-of-cost-or-fair-market-value"},{"term":"Market value","url":"https://dealroom.so/glossary/market-value"},{"term":"Fair market rent","url":"https://dealroom.so/glossary/fair-market-rent"}],"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-7a/questions/can-the-fair-market-value-of-raw-materials-i-contribute-to-the-acquired-business-count-tow","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."]}