For SBA lenders
Short answer
The value of contributed equipment for equity injection is typically based on its depreciated book value or, if older, a current independent appraisal or valuation to establish its fair market value.
When non-cash assets like equipment are contributed as part of the equity injection, the SBA requires a verifiable, conservative valuation. This is usually the lesser of cost or market, or depreciated book value. An independent appraisal may be required if the value is significant or questionable.
A buyer contributes a piece of machinery with a depreciated book value of $20,000, but a recent independent appraisal values it at $25,000. The lender would typically count $20,000 towards the equity injection, using the more conservative book value.
Insider move
Lenders must ensure that any non-cash equity injection is appropriately valued and documented. Overstating the value of contributed assets can lead to misrepresentation and guaranty issues.
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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