{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/how-should-a-lender-verify-an-equity-injection-sourced-from-an-unsecured-personal-loan-fro","api_url":"https://dealroom.so/api/public/questions/how-should-a-lender-verify-an-equity-injection-sourced-from-an-unsecured-personal-loan-fro","question":"How should a lender verify an equity injection sourced from an unsecured personal loan from an unrelated third party?","topic":"Equity injection verification","audience":"lender","bot_mode":"lender","short_answer":"An unsecured personal loan from an unrelated third party cannot count as equity injection for an SBA 7(a) loan. Equity must be unencumbered and come from the borrower or specific eligible sources.","rule":"SBA rules generally require equity injection to come from the personal resources of the borrower, be unencumbered, and not be debt. A loan from a third party, even if unsecured, is still considered debt and does not represent the borrower's permanent investment in the business, thus it cannot be counted as equity.","example":"A borrower plans to inject $50,000 for a $500,000 acquisition. $20,000 is from personal savings, and $30,000 is from a personal loan from a friend. The lender must inform the borrower that the $30,000 from the friend's loan cannot count as equity and the borrower must find an eligible source for the remaining injection.","what_lenders_check":"Lenders must scrutinize the source of all equity injection funds. Any portion identified as a loan, even from a non-owner or family member, must be excluded from the equity calculation unless it meets specific full standby criteria (which are not typical for unrelated third-party loans counting as equity).","required_facts":["Source of funds","Unsecured loan","Third-party lender","Debt vs. equity"],"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":"Foreign-Sourced Equity Injection","url":"https://dealroom.so/glossary/foreign-sourced-equity-injection"},{"term":"Unsecured Personal Loan","url":"https://dealroom.so/glossary/unsecured-personal-loan"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Unsecured loan","url":"https://dealroom.so/glossary/unsecured-loan"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"},{"term":"Tangible Equity Injection","url":"https://dealroom.so/glossary/tangible-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-should-a-lender-verify-an-equity-injection-sourced-from-an-unsecured-personal-loan-fro","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."]}