SBA 7(a) Q&A
Short answer
Generally, no, funds from a secured personal line of credit are not eligible for your equity injection. The SBA requires equity to be unencumbered and not financed through another loan.
Equity injection funds must come from the borrower's unencumbered personal resources, or from acceptable third-party sources without a repayment obligation that would impair the business. Funds borrowed against personal assets or from credit cards are typically not considered eligible equity because they create a contingent liability.
If you have a $75,000 personal line of credit secured by your home, you cannot draw $50,000 from it to use as your equity injection for a $500,000 business purchase. The funds must not create a new debt obligation.
Insider move
Lenders are concerned about the true 'equity' nature of the injection. They will verify that the funds are not borrowed against assets that might also serve as collateral for the SBA loan, or that create additional debt burden for the borrower or business.
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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