SBA 7(a) Q&A
Short answer
No, a bridge loan from a private lender cannot count towards the buyer's required equity injection because it is considered borrowed funds, not unencumbered equity.
The SBA explicitly prohibits the use of borrowed funds for the equity injection unless the loan itself is secured by assets unrelated to the business being acquired and the repayment can be clearly demonstrated without relying on the business's cash flow. General bridge loans are debt, not equity.
A buyer attempts to use a $50,000 bridge loan from a private lender to make up part of their equity injection. This $50,000 would be rejected as ineligible. The buyer would need to source truly unencumbered funds.
Insider move
Lenders rigorously verify the source of equity injection to ensure it is unencumbered. Any form of borrowed funds, especially those that would add leverage to the project, will not be accepted as equity.
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 2026-06-13. 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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