For SBA lenders
Short answer
To verify equity from personal real estate contributed, a lender requires a current independent appraisal, a title search, and documentation confirming the borrower's ownership and any existing liens.
When personal real estate is contributed as non-cash equity, the lender must establish its fair market value via an independent appraisal. Additionally, a title report confirms ownership and identifies any existing liens or encumbrances, ensuring the property's unencumbered value is accurately calculated for equity credit. The borrower's deed and mortgage statements are also reviewed.
A borrower contributes a vacant commercial lot they own, appraised at $200,000, with an existing $50,000 mortgage. The lender obtains a full appraisal, a title commitment showing the $50,000 lien, and the borrower's deed. This allows $150,000 in equity credit, subject to proper lien perfection.
Insider move
Lenders must ensure the valuation is accurate and independent, that the borrower has clear title, and that any existing liens are accounted for in calculating net equity. Proper documentation is essential to support the equity injection and to ensure the collateral can be properly secured.
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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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