SBA 7(a) Q&A
Short answer
Yes, the fair market value of raw materials that are essential for the business's operations and transferred to the acquired entity can potentially count as part of the equity injection.
Non-cash assets, such as inventory or raw materials, can be counted as part of the equity injection if their fair market value is properly substantiated by an independent appraisal or other acceptable method. These assets must be contributed to the new business entity and be essential to its operation.
If a buyer is acquiring a manufacturing business for $800,000 and has $50,000 in raw materials directly applicable to the business, an independent appraisal valuing these materials at $40,000 could allow that $40,000 to count towards the required $80,000 (10%) equity, alongside a $40,000 cash injection.
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.
More on what counts toward the 10%
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