For SBA lenders
Short answer
Yes, an unsecured personal loan from a family member can be used for equity injection if it is properly documented as a gift or a loan on full standby, with no repayment terms that would jeopardize the SBA loan.
Funds from family members must be clearly documented. If structured as a loan, it must be on full standby (no payments of principal or interest for the life of the SBA loan or a minimum of two years, whichever is greater). If it's a gift, a gift letter from the donor and verification of the funds' origin are required.
A borrower receives a $75,000 loan from a parent for an acquisition. To count as equity, the lender would require a promissory note and a full standby agreement signed by the parent, subordinating all payments to the SBA loan for at least two years. The parent must also confirm the funds are unencumbered.
Insider move
Lenders must meticulously document the nature of family funds to ensure they truly represent at-risk equity. Poorly documented family loans can be deemed disguised debt, jeopardizing the equity injection and SBA guaranty.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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