SBA 7(a) Q&A
Short answer
Funds from a home equity line of credit (HELOC) generally do not qualify as equity injection because they are borrowed funds.
The SBA requires equity injection to come from unencumbered sources. Since a HELOC creates a new debt obligation for the borrower, these funds are typically considered ineligible for the required equity injection, as it increases the borrower's overall leverage.
If you plan to use $40,000 drawn from your home equity line for a $400,000 business purchase down payment, a lender would likely tell you these funds are ineligible and you would need to find other unencumbered sources.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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