SBA 7(a) Q&A
Short answer
No, generally an unsecured personal loan is not permitted for the equity injection as it introduces additional leverage and risk to the borrower.
SBA rules require the equity injection to be unencumbered personal funds or funds from legitimate sources that do not add debt to the borrower's personal balance sheet. Funds borrowed against personal assets (like a home equity loan) are permitted if the repayment is not from the business's cash flow, but an unsecured personal loan is typically seen as adding unapproved debt.
A buyer is acquiring a $500,000 business and needs a $50,000 equity injection. They cannot take out a $50,000 personal loan from a bank to cover this amount.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
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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