{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-documentation-must-a-lender-collect-to-verify-equity-injection-funds-originating-from","api_url":"https://dealroom.so/api/public/questions/what-documentation-must-a-lender-collect-to-verify-equity-injection-funds-originating-from","question":"What documentation must a lender collect to verify equity injection funds originating from a newly refinanced personal residence?","topic":"Equity injection verification","audience":"lender","bot_mode":"lender","short_answer":"The lender must collect the settlement statement (CD), loan documents from the refinance, and bank statements showing the funds deposited into the borrower's account to verify the source and amount of the injection.","rule":"Funds derived from a personal residence refinance are acceptable for equity injection if properly documented. The lender must ensure the funds are truly unencumbered cash from the refinance proceeds and not from a subsequent loan or another prohibited source.","example":"A borrower refinances their home, receiving $150,000 cash out. The lender would require the Closing Disclosure from the refinance, the new mortgage statement, and bank statements showing the $150,000 being deposited into the borrower's account and then subsequently injected into the business, free of any new liens or conditions.","what_lenders_check":"Lenders must meticulously verify the source of these funds to ensure they are genuinely from the refinance and are not disguised debt or from ineligible sources. Improper verification could lead to questions about the true equity injection and potential guaranty issues.","required_facts":["Equity injection","Refinance","Personal residence","Documentation","Source verification","Unencumbered"],"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":"Originating lender","url":"https://dealroom.so/glossary/originating-lender"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Minimum Equity Injection","url":"https://dealroom.so/glossary/minimum-equity-injection"},{"term":"Tangible Equity Injection","url":"https://dealroom.so/glossary/tangible-equity-injection"},{"term":"Hidden Equity Injection","url":"https://dealroom.so/glossary/hidden-equity-injection"},{"term":"Equity injection verification","url":"https://dealroom.so/glossary/equity-injection-verification"}],"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-must-a-lender-collect-to-verify-equity-injection-funds-originating-from","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."]}