{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-specific-conditions-must-a-personal-loan-from-a-non-owner-family-member-meet-to-count","api_url":"https://dealroom.so/api/public/questions/what-specific-conditions-must-a-personal-loan-from-a-non-owner-family-member-meet-to-count","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?","topic":"Equity Injection Verification","audience":"lender","bot_mode":"lender","short_answer":"A personal loan from a non-owner family member can count as equity injection if it is on full standby, documented by a subordination agreement, and has no repayment or interest payments for the life of the SBA loan.","rule":"For a loan to qualify as equity, it must not create additional debt service burden on the business or borrower that competes with the SBA loan. Therefore, any loan from a non-owner family member (or any third party) that is intended to count towards the equity injection must be fully subordinated to the SBA loan, meaning no principal or interest payments are made until the SBA loan is repaid in full.","example":"A borrower receives a $25,000 loan from their sibling for equity injection. The lender would require a formal subordination agreement signed by the sibling, explicitly stating that no payments of principal or interest will be made on the $25,000 loan until the SBA 7(a) loan is paid in full.","what_lenders_check":"Lenders must ensure that any subordinated debt intended as equity truly carries no repayment obligation during the SBA loan term. Improperly structured or documented standby agreements can lead to a finding of insufficient equity and a guaranty repair.","required_facts":["Full standby","Subordination agreement","No payments","Non-owner family member","SBA loan priority"],"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":"If a borrower contributes equipment as equity, how does the lender verify its fair market value?","url":"https://dealroom.so/for-lenders/questions/if-a-borrower-contributes-equipment-as-equity-how-does-the-lender-verify-its-fair-market-v"},{"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":"Family member transaction","url":"https://dealroom.so/glossary/family-member-transaction"},{"term":"Conditions precedent to closing","url":"https://dealroom.so/glossary/conditions-precedent-to-closing"},{"term":"Non-owner guarantor","url":"https://dealroom.so/glossary/non-owner-guarantor"},{"term":"Non-owner spouse","url":"https://dealroom.so/glossary/non-owner-spouse"},{"term":"Non-Owner Investor","url":"https://dealroom.so/glossary/non-owner-investor"},{"term":"Conditions","url":"https://dealroom.so/glossary/conditions"}],"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-specific-conditions-must-a-personal-loan-from-a-non-owner-family-member-meet-to-count","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."]}