{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-the-seller-holds-a-minority-stake-e-g-5-after-the-acquisition-does-their-retained-equit","api_url":"https://dealroom.so/api/public/questions/if-the-seller-holds-a-minority-stake-e-g-5-after-the-acquisition-does-their-retained-equit","question":"If the seller holds a minority stake (e.g., 5%) after the acquisition, does their retained equity count towards my 10% injection?","topic":"What counts toward 10%","audience":"borrower","bot_mode":"buyer","short_answer":"No, a seller's retained equity stake in the acquired business does not count towards the buyer's required 10% equity injection.","rule":"The equity injection requirement specifically refers to new capital injected by the buyer(s). Retained equity by the seller, even if they become a minority owner, represents existing capital within the business and is not considered a new injection by the acquiring party. The SBA requires the buyer to bring new cash or unencumbered assets to the transaction.","example":"A buyer is acquiring 95% of a $1,000,000 business, with the seller retaining 5% equity. The buyer still needs to contribute a minimum of $100,000 (10% of $1,000,000) from their own resources, separate from the seller's retained share.","what_lenders_check":"Lenders strictly verify that the buyer's equity injection consists of new, unencumbered funds or assets. They ensure that no portion of the equity is derived from the seller's retained interest or other arrangements that do not represent a true injection of new capital by the buyer.","required_facts":["Retained seller equity","Not buyer injection","New capital required","Minimum 10%","Acquisition structure"],"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 a portion of the business's existing cash on hand at closing towards my equity injection, if it's not from the seller?","url":"https://dealroom.so/sba-7a/questions/can-i-use-a-portion-of-the-business-s-existing-cash-on-hand-at-closing-towards-my-equity-i"}],"related_terms":[{"term":"Minority Stake","url":"https://dealroom.so/glossary/minority-stake"},{"term":"Minority Equity Stake","url":"https://dealroom.so/glossary/minority-equity-stake"},{"term":"Retained Seller Interest","url":"https://dealroom.so/glossary/retained-seller-interest"},{"term":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"term":"5 Cs","url":"https://dealroom.so/glossary/5-cs"},{"term":"Retained Control","url":"https://dealroom.so/glossary/retained-control"}],"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":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/if-the-seller-holds-a-minority-stake-e-g-5-after-the-acquisition-does-their-retained-equit","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."]}