SBA 7(a) Q&A
Short answer
No, the 10% minimum equity injection for a business acquisition can be comprised of cash, a seller note on full standby, or certain other forms of qualified equity.
SBA rules generally require a minimum 10% equity injection for business acquisitions. This can include cash from the borrower, funds from a qualified third-party lender (subordinated to the SBA loan), or a seller note on full standby for the life of the SBA loan. The total injection must represent a genuine investment by the owner.
If you acquire a business for $1,000,000, the minimum equity injection is $100,000. This could be $50,000 cash from you and a $50,000 seller note fully subordinated to the SBA loan.
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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