SBA 7(a) Q&A
Short answer
No, a third-party loan, even if not from the seller, cannot count towards the minimum equity injection for an SBA 7(a) loan. Equity must be unencumbered funds that are truly 'at risk' in the business.
An equity injection must represent the borrower's contribution of capital free of any lien or repayment obligation that would affect the business's ability to repay the SBA loan. Any third-party loan creates a debt that must be serviced, making the funds encumbered and therefore ineligible as true equity.
If you obtain a $40,000 personal loan from a friend or a private lender to make your down payment on a $400,000 business purchase, this $40,000 would not count towards your required equity injection. It would be considered a separate debt.
Insider move
Lenders need to ensure that the borrower's financial capacity is not overleveraged with additional debt. They will carefully review all sources of funds for the down payment to ensure they meet the unencumbered equity requirements.
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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