SBA 7(a) Q&A
Short answer
Besides cash and full-standby seller notes, other buyer contributions that may qualify for equity include qualified personal assets injected into the business, third-party equity investments without repayment obligations, or funds from a true gift.
The SBA permits various forms of equity, as long as they represent unencumbered funds or assets contributed by the buyer that are 'at risk' in the business. This excludes funds that are borrowed or create a repayment obligation that would impair the business's ability to service the SBA loan.
For a $600,000 acquisition requiring $60,000 in equity, you could contribute $30,000 cash, a $20,000 seller note on full standby, and $10,000 in unencumbered machinery from a prior venture that is directly applicable to the acquired business, provided it is properly valued.
Insider move
Lenders will require thorough documentation and appraisal for any non-cash assets contributed as equity. They need to verify that these assets are truly unencumbered, properly valued, and directly benefit the acquired business without creating additional liabilities.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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 2026-06-14. 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.
More on what counts toward the 10%
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