{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-is-the-maximum-allowed-equity-injection-percentage-that-can-come-from-seller-financin","api_url":"https://dealroom.so/api/public/questions/what-is-the-maximum-allowed-equity-injection-percentage-that-can-come-from-seller-financin","question":"What is the maximum allowed equity injection percentage that can come from seller financing on full standby?","topic":"Equity injection & standby","audience":"lender","bot_mode":"lender","short_answer":"SBA requires at least 10% of the total project costs to be injected by the borrower. Of this 10%, a minimum of half (5%) must be cash, or unencumbered assets, with the remainder (up to 5%) potentially being a seller note on full standby.","rule":"For a change of ownership, the borrower must inject at least 10% of the total project costs. This injection must consist of at least 5% cash or unencumbered assets. The remaining 5% of the 10% total injection can be in the form of a seller note on full standby for the life of the SBA loan. Any seller financing beyond the 5% that comprises the required injection must also be on full standby.","example":"A business acquisition has a total project cost of $1,000,000. The borrower must inject at least $100,000. A minimum of $50,000 must be cash. The remaining $50,000 of the required injection could be from a seller note on full standby. If the seller provides a $150,000 standby note, $50,000 counts towards the injection, and the additional $100,000 is still on full standby.","what_lenders_check":"Lenders must carefully calculate the required equity and ensure the appropriate mix of cash/assets and standby seller notes. Miscalculating this or not ensuring proper standby terms can lead to a guaranty repair or denial. The standby note must be verified to meet all SBA requirements.","required_facts":["Total project costs","Minimum cash injection","Seller note standby","SBA policy"],"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":[],"related_terms":[{"term":"Seller Financing on Full Standby","url":"https://dealroom.so/glossary/seller-financing-on-full-standby"},{"term":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Disguised Seller Financing","url":"https://dealroom.so/glossary/disguised-seller-financing"},{"term":"Seller's Financing","url":"https://dealroom.so/glossary/seller-s-financing"},{"term":"Contingent Seller Financing","url":"https://dealroom.so/glossary/contingent-seller-financing"}],"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-is-the-maximum-allowed-equity-injection-percentage-that-can-come-from-seller-financin","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."]}