{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-the-seller-s-investment-in-the-business-immediately-prior-to-sale-count-towards-my-equ","api_url":"https://dealroom.so/api/public/questions/can-the-seller-s-investment-in-the-business-immediately-prior-to-sale-count-towards-my-equ","question":"Can the seller's investment in the business immediately prior to sale count towards my equity injection?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"No, the seller's investment in the business immediately prior to the sale cannot count towards the buyer's required equity injection.","rule":"The SBA requires the equity injection to come directly from the buyer's own funds or eligible third-party sources (like gifts or investor funds). Funds injected by the seller immediately before the sale are considered part of the seller's contribution to the business being sold, not the buyer's new equity.","example":"If a seller puts $20,000 into the business bank account a week before closing to improve working capital, and you are the buyer, this $20,000 cannot be claimed as part of your required $50,000 equity injection for a $500,000 purchase.","what_lenders_check":"Lenders meticulously trace the source of equity injection funds to ensure they originate from the buyer or approved third parties. Funds transferred by the seller just before closing would be viewed as seller-provided capital, not new equity from the buyer, and would not satisfy the injection requirement.","required_facts":[],"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 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":"Seller's equity","url":"https://dealroom.so/glossary/seller-s-equity"},{"term":"Equity Investment","url":"https://dealroom.so/glossary/equity-investment"},{"term":"Investment business","url":"https://dealroom.so/glossary/investment-business"},{"term":"Seller's lien","url":"https://dealroom.so/glossary/seller-s-lien"},{"term":"Seller's Financing","url":"https://dealroom.so/glossary/seller-s-financing"},{"term":"Equity in real estate","url":"https://dealroom.so/glossary/equity-in-real-estate"}],"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-seller-s-investment-in-the-business-immediately-prior-to-sale-count-towards-my-equ","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."]}