{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-much-of-my-equity-injection-must-be-cash-rather-than-other-assets-or-seller-financing","api_url":"https://dealroom.so/api/public/questions/how-much-of-my-equity-injection-must-be-cash-rather-than-other-assets-or-seller-financing","question":"How much of my equity injection must be cash, rather than other assets or seller financing?","topic":"Down payment & equity injection","audience":"borrower","bot_mode":"buyer","short_answer":"Generally, for most business acquisitions, at least half of the required 10% equity injection must be in cash. The other half can be seller financing on full standby.","rule":"SBA rules require a minimum equity injection, typically 10% of the project cost for business acquisitions. While seller notes on full standby can count for up to 5% of the 10% injection, the remaining portion must generally be true cash injected by the buyer. This ensures the buyer has sufficient skin in the game.","example":"For a $1,000,000 business acquisition, a 10% equity injection is $100,000. At least $50,000 must be cash from the buyer. The remaining $50,000 could be a seller note on full standby.","what_lenders_check":"Lenders verify the source and seasoning of cash equity to ensure it's truly the buyer's unencumbered funds. They are concerned about 'phantom equity' where the cash is not genuine or comes from prohibited sources.","required_facts":["Project cost","Buyer cash injection","Seller note standby","Equity injection %"],"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":"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":"Non-Cash Equity Injection","url":"https://dealroom.so/glossary/non-cash-equity-injection"},{"term":"Cash injection","url":"https://dealroom.so/glossary/cash-injection"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Cash equity","url":"https://dealroom.so/glossary/cash-equity"},{"term":"Disguised Seller Financing","url":"https://dealroom.so/glossary/disguised-seller-financing"},{"term":"Seller's Financing","url":"https://dealroom.so/glossary/seller-s-financing"}],"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/how-much-of-my-equity-injection-must-be-cash-rather-than-other-assets-or-seller-financing","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."]}