For SBA lenders
Short answer
Lenders must verify gifted equity injection funds from a foreign national by requiring documentation of the donor's identity, the source of their funds, and the transfer of funds to the borrower. This includes bank statements, transaction records, and a gift letter clearly stating no repayment is expected.
SBA requires all equity injection funds, regardless of source, to be fully verified, seasoned, and unencumbered. When the donor is a foreign national, the lender must exercise additional due diligence to ensure the funds are legitimate, properly sourced, and fully gifted without any implied obligation for repayment, to prevent money laundering or illicit funds.
A borrower receives a $100,000 gift from a relative in Canada for equity injection. The lender requests the donor's bank statements showing the funds' origination, the wire transfer confirmation to the borrower's account, and a formal gift letter from the Canadian relative confirming no repayment is due.
Insider move
The primary concern is ensuring the funds are legitimate, unencumbered, and truly a gift, especially with foreign nationals where traceability can be more challenging. Lenders need to mitigate risks of money laundering, undisclosed debt, or non-eligible injection sources to protect the 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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