SBA 7(a) Q&A
Short answer
Yes, funds from a cash-out refinance of an investment property can count towards your down payment, provided they are unencumbered and properly documented.
SBA rules permit the use of funds derived from the sale or refinancing of personal assets, including investment properties, for equity injection. The key is to demonstrate that these funds are truly the borrower's capital, unencumbered by secondary loans or repayment obligations that would compete with the SBA loan. Documentation like refinance statements and bank deposits are required.
A buyer refinances an unencumbered investment property, generating $100,000 cash, which is deposited into their personal bank account. This $100,000 can be used for the equity injection, provided the lender verifies the source with closing documents and bank statements.
Insider move
Lenders will confirm that the funds are genuinely the borrower's and not subject to any repayment terms that would impact the borrower's ability to service the SBA debt. They will review the refinance documents and bank statements for clear traceability.
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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