SBA 7(a) Q&A
Short answer
Yes, funds from an investor owning less than 20% of the business can be used for equity, provided the investment is unsecured and on full standby if they are also a lender.
Investor funds are acceptable as equity injection. If the investor receives an equity stake, it must be properly documented. If the investor also provides a loan to the business, that loan must be on full standby to the SBA loan and unsecured to count as equity.
If a new investor contributes $50,000 for a 10% stake in your $1 million acquisition, these funds count towards your equity injection. The lender will review the investment agreement and source of funds.
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 2026-06-13. 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
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