For SBA lenders
Short answer
Yes, typically, there is a minimum cash portion for the equity injection, usually 10% of the project cost, though some or all of this may be replaced by a seller note on full standby in certain situations.
The SBA generally requires a minimum of 10% equity injection from the borrower for business acquisitions. While a seller note on full standby can sometimes replace a portion of this, a direct cash injection from the borrower is preferred and often required to demonstrate real financial commitment. The exact cash portion will depend on the overall deal structure and lender policy.
For a $1,000,000 business acquisition, the borrower provides $50,000 cash and the seller provides a $50,000 full standby note. This meets the 10% equity requirement, with half being cash and half seller standby.
Lenders must verify the source and availability of the cash portion, ensuring it's unencumbered. They must also ensure that any non-cash components, like seller standby notes, fully comply with SBA subordination requirements.
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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