{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/can-the-value-of-equipment-already-owned-by-the-borrower-and-contributed-to-the-new-busine","api_url":"https://dealroom.so/api/public/questions/can-the-value-of-equipment-already-owned-by-the-borrower-and-contributed-to-the-new-busine","question":"Can the value of equipment already owned by the borrower and contributed to the new business count towards the required equity injection?","topic":"Equity injection verification","audience":"lender","bot_mode":"lender","short_answer":"Yes, the fair market value of unencumbered equipment contributed by the borrower to the business can count towards the equity injection, provided it is properly valued and documented.","rule":"Equity injection can consist of cash, fixed assets, or a combination thereof. If a borrower contributes existing equipment, the fair market value of that equipment, as determined by an independent appraisal or other acceptable valuation method, may be counted as equity, provided it is unencumbered.","example":"A borrower purchasing a manufacturing business needs $50,000 in equity. They own a piece of specialized machinery, valued at $30,000 by an independent appraiser, which they will contribute to the acquired business. This $30,000 can count towards their equity injection.","what_lenders_check":"Lenders must ensure the equipment's valuation is credible and from a reliable source. They must also verify that the equipment is truly unencumbered and that the borrower has clear title to it before counting it as part of the equity injection.","required_facts":["Equipment contribution","Borrower owned","Fair market value","Unencumbered","Equity injection"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","Standard 7(a) Authorization File Library"],"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":"Standard 7(a) Authorization File Library","url":"https://www.sba.gov/document/support-standard-7a-authorization-file-library"}],"related_questions":[{"question":"What documentation verifies funds for equity injection transferred from a personal investment account?","url":"https://dealroom.so/for-lenders/questions/what-documentation-verifies-funds-for-equity-injection-transferred-from-a-personal-investm"},{"question":"How does a lender verify equity injection funds that are a cash gift from a non-family third party?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-equity-injection-funds-that-are-a-cash-gift-from-a-non-family-thi"},{"question":"Can a borrower's investment in a certificate of deposit (CD) count towards the required equity injection?","url":"https://dealroom.so/for-lenders/questions/can-a-borrower-s-investment-in-a-certificate-of-deposit-cd-count-towards-the-required-equi"},{"question":"What specific documentation is required to verify equity injection funds originating from a borrower's existing business assets, such as equipment or inventory?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-to-verify-equity-injection-funds-originating-from-"},{"question":"How does a lender verify the source of gifted equity injection funds when the donor is a foreign national?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-the-source-of-gifted-equity-injection-funds-when-the-donor-is-a-f"},{"question":"How does a lender verify equity injection funds that are sourced from a personal line of credit secured by non-personal real estate?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-equity-injection-funds-that-are-sourced-from-a-personal-line-of-c"}],"related_terms":[{"term":"Contributed Equipment","url":"https://dealroom.so/glossary/contributed-equipment"},{"term":"New Business Entity","url":"https://dealroom.so/glossary/new-business-entity"},{"term":"Veteran-owned business","url":"https://dealroom.so/glossary/veteran-owned-business"},{"term":"Loan-to-Value","url":"https://dealroom.so/glossary/loan-to-value"},{"term":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Contributed Asset","url":"https://dealroom.so/glossary/contributed-asset"}],"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/for-lenders/questions/can-the-value-of-equipment-already-owned-by-the-borrower-and-contributed-to-the-new-busine","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."]}