For SBA lenders
Short answer
The lender must obtain financial statements from the existing business, bank statements showing the transfer of funds, and possibly an accountant's letter to verify the funds are legitimate, unencumbered, and sourced from retained earnings or capital.
SOP 50 10 requires verification of the source of equity injection. If funds come from another business owned by the borrower, the lender must ensure the contributing business is financially sound enough for the withdrawal, and that the funds represent legitimate equity (e.g., retained earnings, not a loan from the business).
A borrower injects $150,000 from their existing, profitable business. The lender requests three years of financial statements for the existing business, the current bank statements, and a resolution from the existing business authorizing the capital distribution.
Insider move
Lenders must verify that funds from an existing business do not impair its financial stability and are not a disguised loan. Insufficient verification can lead to questions about the true source and permanence of the equity.
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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