For SBA lenders
Short answer
While the overall equity injection requirement varies, there is no explicit SBA rule mandating a minimum percentage of the injection to be cash. However, cash is the most common and preferred form.
The SBA's focus is on the total eligible equity injection, which can include cash, a seller note on full standby, or certain other eligible assets. Lenders, applying prudent lending standards, often prefer a significant cash component to demonstrate borrower commitment.
A $1,000,000 acquisition requires a 10% ($100,000) equity injection. The borrower provides $25,000 cash and a $75,000 seller note on full standby. While the cash component is less than the total injection, it's acceptable if all components are eligible.
Insider move
Lenders evaluate the overall quality of the equity injection. A low cash component might raise concerns about the borrower's financial commitment, prompting the lender to require a higher total injection or stronger collateral.
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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