For SBA lenders
Short answer
Lenders must verify the source and seasoning of cash equity injections. Funds must be unencumbered and typically sourced from liquid assets held by the borrower for at least 90 days.
The SBA requires lenders to verify that the equity injection is from eligible sources and is truly 'at risk' in the business. This means funds should generally be seasoned (held in the borrower's account for at least 90 days) to demonstrate genuine liquidity and prevent circular financing. If unseasoned, the source must be clearly documented.
A borrower contributes $100,000 cash. The lender would obtain 3-6 months of personal bank statements showing the funds in the account and no recent large deposits from an unverified source or debt. If a large, unseasoned deposit occurred, the lender would require documentation for that deposit (e.g., sale of a personal asset).
Insider move
Lenders are concerned about verifying the legitimacy of the source of funds to prevent fraud, ensure the injection is truly unencumbered cash, and confirm the borrower has sufficient 'skin in the game.'
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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