{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-equity-injection-funds-from-a-borrower-s-investment-account-holdi","api_url":"https://dealroom.so/api/public/questions/how-does-a-lender-verify-equity-injection-funds-from-a-borrower-s-investment-account-holdi","question":"How does a lender verify equity injection funds from a borrower's investment account holding illiquid assets?","topic":"Equity injection verification","audience":"lender","bot_mode":"lender","short_answer":"Illiquid assets from an investment account generally do not count as a cash equity injection unless they are converted to cash prior to closing and the source is properly documented.","rule":"SBA rules require equity injection to be from unencumbered, verifiable sources. While investment accounts can be a source, the funds must be liquid and available at closing. Illiquid assets, such as private equity holdings or restricted stock, typically need to be sold and converted to cash, with the transaction documented to trace the funds.","example":"A borrower claims $100,000 equity from their private stock portfolio. The lender requires documentation showing the sale of these stocks, the deposit of the cash into a verifiable account, and a no-lien affidavit to confirm the funds are unencumbered before closing.","what_lenders_check":"Lenders must ensure that equity injection funds are genuinely the borrower's unencumbered cash and are readily available. Verifying the conversion of illiquid assets to cash prevents issues with fund availability and ensures compliance with SBA equity requirements.","required_facts":["Illiquid assets","Cash conversion","Source documentation","Unencumbered funds","Availability at closing"],"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":"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":"Equity Investment","url":"https://dealroom.so/glossary/equity-investment"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Lender's Transcript of Account","url":"https://dealroom.so/glossary/lender-s-transcript-of-account"},{"term":"Borrower Equity","url":"https://dealroom.so/glossary/borrower-equity"},{"term":"Private equity holding","url":"https://dealroom.so/glossary/private-equity-holding"},{"term":"Retirement account funds","url":"https://dealroom.so/glossary/retirement-account-funds"}],"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/how-does-a-lender-verify-equity-injection-funds-from-a-borrower-s-investment-account-holdi","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."]}