SBA 7(a) Q&A
Short answer
No, the seller's investment in the business immediately prior to the sale cannot count towards the buyer's required equity injection.
The SBA requires the equity injection to come directly from the buyer's own funds or eligible third-party sources (like gifts or investor funds). Funds injected by the seller immediately before the sale are considered part of the seller's contribution to the business being sold, not the buyer's new equity.
If a seller puts $20,000 into the business bank account a week before closing to improve working capital, and you are the buyer, this $20,000 cannot be claimed as part of your required $50,000 equity injection for a $500,000 purchase.
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.
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