For SBA lenders
Short answer
Lenders must verify the source and sufficiency of a borrower's cash equity injection by reviewing bank statements covering at least the most recent three months.
SBA rules require lenders to confirm that equity injection funds are from an eligible source and are unencumbered. For cash, this involves tracing the funds from the borrower's personal account to the business or escrow account, ensuring they are truly the borrower's assets and not borrowed without proper subordination.
A borrower for a $500,000 acquisition needs to inject $50,000 cash. The lender verifies the $50,000 balance and recent history by reviewing three months of the borrower's personal bank statements, then tracks the transfer to the business closing account.
Lenders are concerned about confirming the actual source of funds and ensuring they are not borrowed funds disguised as equity. Adequate documentation prevents potential guaranty repairs or denials if the injection's eligibility is questioned.
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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