For SBA lenders

What documentation is required to verify equity injection from a gift from a non-family member?

Short answer

Gifted equity from a non-family member is generally not permitted unless the gift is clearly unconditional, documented by a gift letter, and verifiable through bank statements showing the donor's capacity to give and the recipient's deposit.

The rule

SBA policy on gifted equity primarily recognizes gifts from family members who have no interest in the business. Gifts from non-family members are highly scrutinized and generally disallowed as a source of equity injection, as they may be disguised loans or raise questions of eligibility or undue influence. If a non-family gift is permitted under very specific circumstances, it must be fully documented as unconditional and irrevocable, with clear proof of funds from the donor.

Facts that matter

Non-family gift
Unconditional gift
Proof of funds
SBA eligibility rules

Example structure

A borrower attempts to use $20,000 gifted from a friend for their equity injection. The lender, citing SBA policy, informs the borrower that a gift from a non-family member is generally not acceptable for equity injection.

What documentation is required to verify equity injection from a gift from a non-family member?

The rule

Facts that matter

Example structure

What lenders usually care about

Official sources