For SBA lenders
Short answer
Cash gifts from non-family third parties are generally not permitted for equity injection unless they meet specific, limited criteria and are fully documented to ensure no repayment obligation.
While gifts from immediate family members are allowed with specific documentation (gift letter, source of funds), gifts from unrelated third parties are highly scrutinized and generally disallowed by the SBA for equity injection. If accepted under rare circumstances (e.g., grant from an economic development agency), the lender must verify it is an irrevocable gift with no repayment terms, and the donor's source of funds must be documented.
A local economic development agency provides a $50,000 grant to a business owner for startup costs. The lender would require an official grant letter, proof of the agency's funding, and verification that no repayment is expected from the borrower.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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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