SBA 7(a) Q&A
Short answer
Contributing intellectual property (IP) as equity is possible but requires a formal, independent valuation to determine its fair market value and ensure it's essential to the business.
Non-cash assets can be part of the equity injection, but their value must be substantiated by an independent third-party appraisal. The IP must be directly related to and essential for the operation of the business being acquired or established.
A buyer wants to contribute a patent for a unique manufacturing process. An independent appraiser values the patent at $50,000, which then counts towards the buyer's required equity injection.
Insider move
Lenders are cautious with non-cash equity and will require a comprehensive, independent appraisal by a qualified expert. They also verify that the IP is free of encumbrances and legally assigned to the new business entity.
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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