For SBA lenders
Short answer
The SBA evaluates contributed equipment as equity injection based on its fair market value, which must be supported by an independent appraisal or other acceptable valuation method.
Non-cash equity injections, such as equipment, are acceptable if the assets are essential to the business and their value is properly substantiated. For equipment, this typically requires a current, independent appraisal to establish fair market value. The equipment must be transferred into the acquiring business entity.
A borrower contributes specialized manufacturing equipment, valued at $75,000, as part of their equity injection for a $750,000 business acquisition. The lender requires an independent equipment appraisal to confirm the value and ensures the equipment is transferred to the acquiring business entity.
Insider move
Lenders are concerned about potential overvaluation of contributed assets. They must ensure the appraisal is credible, the equipment is truly essential to the business, and it is properly titled and free of prior liens upon contribution.
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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