{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-does-the-sba-evaluate-the-value-of-contributed-equipment-for-equity-injection","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-evaluate-the-value-of-contributed-equipment-for-equity-injection","question":"How does the SBA evaluate the value of contributed equipment for equity injection?","topic":"Equity injection verification","audience":"lender","bot_mode":"lender","short_answer":"The value of contributed equipment for equity injection is typically based on its depreciated book value or, if older, a current independent appraisal or valuation to establish its fair market value.","rule":"When non-cash assets like equipment are contributed as part of the equity injection, the SBA requires a verifiable, conservative valuation. This is usually the lesser of cost or market, or depreciated book value. An independent appraisal may be required if the value is significant or questionable.","example":"A buyer contributes a piece of machinery with a depreciated book value of $20,000, but a recent independent appraisal values it at $25,000. The lender would typically count $20,000 towards the equity injection, using the more conservative book value.","what_lenders_check":"Lenders must ensure that any non-cash equity injection is appropriately valued and documented. Overstating the value of contributed assets can lead to misrepresentation and guaranty issues.","required_facts":["Contributed equipment","Depreciated book value","Independent appraisal","Fair market value","Conservative valuation"],"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":"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 injection verification","url":"https://dealroom.so/glossary/equity-injection-verification"},{"term":"Contributed Equipment","url":"https://dealroom.so/glossary/contributed-equipment"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"},{"term":"Tangible Equity Injection","url":"https://dealroom.so/glossary/tangible-equity-injection"},{"term":"Hidden Equity Injection","url":"https://dealroom.so/glossary/hidden-equity-injection"}],"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-the-sba-evaluate-the-value-of-contributed-equipment-for-equity-injection","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."]}