{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v","api_url":"https://dealroom.so/api/public/questions/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v","question":"If a borrower contributes equipment as equity, how does the lender verify its fair market value?","topic":"Equity Injection Verification","audience":"lender","bot_mode":"lender","short_answer":"When a borrower contributes equipment as equity, the lender must verify its fair market value through independent appraisal, invoices, or other reliable third-party documentation to ensure accurate valuation.","rule":"Non-cash equity injections, such as equipment, must be valued at their depreciated fair market value. The lender is responsible for obtaining credible documentation, which can include an independent appraisal by a qualified appraiser, recent purchase invoices, or other third-party valuations. The equipment must be unencumbered and necessary for the business operation.","example":"A borrower contributes a fully paid-for commercial oven to a bakery acquisition, claiming a $15,000 equity injection. The lender would require an independent equipment appraisal to confirm the oven's current fair market value, or a recent invoice if it was purchased new, along with proof of payment.","what_lenders_check":"Lenders must prevent overvaluation of non-cash assets contributed as equity, which can inflate the true equity injection. Reliable third-party valuation is critical to substantiate the equity amount and protect the integrity of the loan structure, avoiding potential guaranty repair.","required_facts":["Equipment contribution","Fair market value","Independent appraisal","Invoices","Unencumbered asset"],"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":"How does a lender verify equity injection funds originating from a newly established business bank account?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-equity-injection-funds-originating-from-a-newly-established-busin"},{"question":"Can a borrower's investment in leasehold improvements prior to loan closing count towards the equity injection?","url":"https://dealroom.so/for-lenders/questions/can-a-borrower-s-investment-in-leasehold-improvements-prior-to-loan-closing-count-towards-"},{"question":"What specific documentation is required to verify the source of gifted equity injection funds from a foreign family member?","url":"https://dealroom.so/for-lenders/questions/what-specific-documentation-is-required-to-verify-the-source-of-gifted-equity-injection-fu"},{"question":"What specific conditions must a personal loan from a non-owner family member meet to count as equity injection for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-conditions-must-a-personal-loan-from-a-non-owner-family-member-meet-to-count"},{"question":"How does a lender verify the source of gifted equity injection funds from a foreign national?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-verify-the-source-of-gifted-equity-injection-funds-from-a-foreign-nation"},{"question":"Can a loan from a non-owner family member count as equity injection for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/can-a-loan-from-a-non-owner-family-member-count-as-equity-injection-for-a-7-a-loan"}],"related_terms":[{"term":"Fair market value","url":"https://dealroom.so/glossary/fair-market-value"},{"term":"Net fair market value","url":"https://dealroom.so/glossary/net-fair-market-value"},{"term":"Business Fair Market Value","url":"https://dealroom.so/glossary/business-fair-market-value"},{"term":"Borrower Equity","url":"https://dealroom.so/glossary/borrower-equity"},{"term":"Market value","url":"https://dealroom.so/glossary/market-value"},{"term":"Fair market rent","url":"https://dealroom.so/glossary/fair-market-rent"}],"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/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v","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."]}