For SBA lenders
Short answer
When a borrower contributes equipment as equity, the lender must verify its fair market value through independent appraisal, invoices, or other reliable third-party documentation to ensure accurate valuation.
Non-cash equity injections, such as equipment, must be valued at their depreciated fair market value. The lender is responsible for obtaining credible documentation, which can include an independent appraisal by a qualified appraiser, recent purchase invoices, or other third-party valuations. The equipment must be unencumbered and necessary for the business operation.
A borrower contributes a fully paid-for commercial oven to a bakery acquisition, claiming a $15,000 equity injection. The lender would require an independent equipment appraisal to confirm the oven's current fair market value, or a recent invoice if it was purchased new, along with proof of payment.
Insider move
Lenders must prevent overvaluation of non-cash assets contributed as equity, which can inflate the true equity injection. Reliable third-party valuation is critical to substantiate the equity amount and protect the integrity of the loan structure, avoiding potential guaranty repair.
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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