SBA 7(a) Q&A
Short answer
Yes, personally owned intellectual property can count towards equity injection if it is essential to the acquired business and properly valued.
Similar to other tangible assets, intellectual property (IP) owned by the borrower can be contributed as part of the equity injection if it is critical to the success of the acquired business. The IP must be appraised by an independent, qualified appraiser to determine its fair market value, and all legal rights must be transferred to the business.
A buyer acquiring a software development firm personally owns a patent for a critical algorithm. If independently appraised at $75,000 and transferred to the acquired business, this value can be part of the buyer's equity injection for a $750,000 purchase requiring $75,000 equity.
Lenders will focus on the IP's relevance to the business, its accurate and independent valuation, and the proper legal transfer of ownership to the borrowing entity. They must ensure the IP is free of encumbrances.
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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