SBA 7(a) Q&A
Short answer
Yes, retained earnings from a prior, operating business you own can be used as equity injection for a new acquisition, provided they are unencumbered.
Retained earnings, as long as they represent accumulated profits and are not subject to existing liens or repayment obligations, are considered a valid source of equity injection. The funds must be transferred from the prior business to the acquiring entity.
If your existing consulting business has $150,000 in unencumbered retained earnings, and you need a $100,000 equity injection for a $1,000,000 acquisition, you can transfer $100,000 from your consulting business's bank account to the acquiring entity's account.
Insider move
Lenders will verify the source of these funds, ensuring they are truly retained earnings, are liquid, and are not subject to any existing claims or liens that would make them encumbered.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. 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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