{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-documentation-is-required-to-verify-the-source-of-funds-for-a-borrower-s-equity-injec","api_url":"https://dealroom.so/api/public/questions/what-documentation-is-required-to-verify-the-source-of-funds-for-a-borrower-s-equity-injec","question":"What documentation is required to verify the source of funds for a borrower's equity injection, especially for personal savings?","topic":"Equity injection verification","audience":"lender","bot_mode":"lender","short_answer":"To verify personal savings for an equity injection, lenders require recent bank statements (typically 3-6 months) showing the accumulation of funds, along with explanations for any large or unusual deposits.","rule":"The SBA requires lenders to verify the source of all equity injection funds to ensure they are unencumbered and truly from the borrower or an eligible third party. For personal savings, this means reviewing bank statements to confirm the funds have been held in the account for a reasonable period and are not recently borrowed. Any significant, recent deposits must be explained and documented to ensure they are not from ineligible sources (e.g., a credit card cash advance or a loan not on full standby).","example":"A borrower claims $100,000 in personal savings for equity. The lender requests 6 months of bank statements. They observe a $50,000 deposit made 2 months prior. The lender then requires documentation (e.g., a sale agreement) proving these funds came from the sale of the borrower's personal vehicle.","what_lenders_check":"Lenders must prevent 'circular financing' or the use of ineligible funds for equity. Scrutinizing bank statements and requesting explanations for significant deposits protects against guaranty repairs arising from improper equity injection verification.","required_facts":["Bank statements (3-6 months)","Source of funds","Large deposit explanations","Unencumbered funds","Equity injection amount"],"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":"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":"Source of funds","url":"https://dealroom.so/glossary/source-of-funds"},{"term":"Source-of-Funds Verification","url":"https://dealroom.so/glossary/source-of-funds-verification"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Borrower Equity","url":"https://dealroom.so/glossary/borrower-equity"},{"term":"Source and seasoning of funds","url":"https://dealroom.so/glossary/source-and-seasoning-of-funds"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-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/what-documentation-is-required-to-verify-the-source-of-funds-for-a-borrower-s-equity-injec","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."]}