SBA 7(a) Q&A
Short answer
Yes, a buyer's existing equity in a business can be recognized as part of the equity injection for a partner buyout, provided certain conditions are met.
For a partner buyout, a buyer's existing equity (ownership stake) in the business can be counted towards the required equity injection if it represents a cash injection at the time of purchase or prior retained earnings. The SBA considers this a valid contribution to the ownership change.
A partner owns 50% of a business valued at $800,000 and wants to buy out their retiring partner. Their existing 50% equity ($400,000) can fulfill the minimum 10% equity injection ($80,000) for the loan to purchase the remaining 50%.
Insider move
Lenders will scrutinize the historical financial statements to verify the existing equity and ensure it reflects actual cash contributions or retained earnings, not merely goodwill. They will also confirm the terms of the buyout agreement.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-14. 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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