For SBA lenders
Short answer
Verifying cash deposits requires detailed documentation including bank statements showing the deposits, evidence of the cash source (e.g., prior business sales, documented savings), and borrower's signed certification of the source.
The SBA requires clear verification of the source and use of equity injection funds. For cash deposits, a lender must document the accumulation of funds in the borrower's account over time and obtain a reasonable explanation and supporting evidence for the source of these cash funds, beyond mere self-certification, to ensure they are not borrowed or undocumented.
A borrower for a $500,000 acquisition loan claims a $50,000 cash injection from accumulated savings. The lender obtains 12 months of bank statements showing regular cash deposits of $3,000-$5,000. The lender requests documentation (e.g., prior tax returns, pay stubs, withdrawal slips from another account) and a signed affidavit from the borrower explaining the consistent cash source.
Insider move
Lenders must prevent 'round-tripping' of funds or undisclosed borrowed equity. They look for consistent, verifiable sources for cash deposits, ensuring they are not from a prohibited source or used to circumvent injection requirements. Lack of clear source documentation is a common issue for guaranty repairs.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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