SBA 7(a) Q&A
Short answer
No, a short-term personal loan from a relative, even if repaid before closing, typically cannot be considered your unencumbered equity injection if the original source was borrowed.
The SBA requires equity injection funds to be "unencumbered," meaning they cannot be borrowed. Even if a short-term loan is repaid, the original source of the funds used for the injection would still be considered borrowed and therefore ineligible, unless the repayment demonstrably came from other unencumbered sources.
If a relative loans you $50,000 which you then use for your equity, and you repay the relative with funds from another borrowed source before closing, the $50,000 is still considered borrowed and won't count. If you repaid them with unencumbered personal savings, that would be different.
Lenders conduct thorough source-of-funds verification, requiring bank statements over several months to "season" the funds. They are specifically looking for evidence that the equity is truly from the borrower's unencumbered resources and not from a hidden loan.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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.
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day