SBA 7(a) Q&A
Short answer
Sweat equity or future services performed by the borrower generally cannot be counted as part of the required cash equity injection for an SBA 7(a) loan.
The SBA defines equity injection as tangible, unencumbered capital at risk. Future services or "sweat equity," while valuable, do not represent an immediate, measurable capital contribution to the business at the time of closing and thus do not satisfy the equity requirement.
A buyer proposes to contribute 1,000 hours of their time developing a new product line as part of their equity. This cannot be valued and used to satisfy the 10% cash equity injection for a $600,000 business purchase.
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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