SBA 7(a) Q&A
Short answer
Yes, if the buyer is contributing an existing, operating business to merge with or acquire another, the net fair market value of the contributed assets can count as equity injection.
When a borrower contributes an existing business to the acquisition, the net book value or appraised value of the assets, less any liabilities associated with them, may be counted as part of the required equity injection. This is common in "roll-up" acquisitions where an existing entity acquires another.
A buyer, already owning a business worth $200,000 (net of liabilities), uses it to acquire a $1,000,000 target business. The $200,000 can count towards the required 10% ($100,000) equity injection, potentially covering it entirely.
Lenders require an independent valuation of the contributed business assets to ensure their fair market value. They also verify that these assets are unencumbered or that any existing liens will be subordinated to the SBA loan.
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.
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