SBA 7(a) Q&A
Short answer
Yes, certain renovation costs paid by the buyer can count towards the equity injection if they are directly related to the business acquisition and part of the total project costs.
Equity injection must be unencumbered and from the borrower. Renovation costs incurred and paid by the buyer pre-closing, which are essential for the business to operate or improve its value, can be considered part of the project costs that the equity injection covers. Documentation of payments and relation to the project is crucial.
A buyer purchases a $500,000 business and immediately plans $50,000 in necessary renovations. If the buyer pays $25,000 of these renovation costs from their personal funds before closing, this $25,000 can count towards the required 10% equity injection.
Lenders will require invoices and proof of payment for the renovation costs, ensuring they are legitimate and were paid from the buyer's unencumbered personal funds or other eligible equity sources.
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.
More on what counts toward the 10%
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