SBA 7(a) Q&A
Short answer
No, generally, the seller paying your closing costs cannot be counted as part of your equity injection. Equity injection must come from the buyer or approved third parties at risk.
Equity injection must be funds or assets contributed by the buyer or an eligible third party that is truly 'at risk' in the business. Payments made by the seller, even if benefiting the buyer, are typically considered a reduction in the effective purchase price rather than an equity injection from the buyer's side. The SBA's intent is for the buyer to put their own funds or approved third-party funds into the deal.
If you agree to buy a business for $500,000 and the seller offers to pay your $10,000 in legal closing costs, that $10,000 cannot be used to satisfy your required $50,000 cash injection. You would still need to provide the full $50,000 from your own eligible sources.
Insider move
Lenders will scrutinize all sources of funds for the equity injection to ensure compliance with SBA rules, which emphasize the buyer's genuine 'at risk' contribution. Seller contributions are generally viewed as part of the overall transaction terms, not buyer equity.
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 2026-06-14. 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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