SBA 7(a) Q&A
Short answer
The SBA requires a signed gift letter from your parents stating the funds are an irrevocable gift, along with proof of transfer and the source of their funds.
For gifted funds to qualify as equity injection, the SBA mandates a gift letter signed by the donor (your parents) explicitly stating that the funds are an unconditional gift, with no expectation of repayment. The letter must also specify the amount and the relationship. Lenders will also require documentation of the transfer of funds to your account and verification of the source of your parents' funds to ensure they are legitimate and unencumbered.
A buyer needs $50,000 equity for a business purchase. Their parents provide a $50,000 gift. The lender requires a gift letter, bank statements showing the funds leaving the parents' account, and statements showing the deposit into the buyer's account.
Insider move
Lenders are vigilant about 'unencumbered' funds. They will trace the gifted funds back to the source to confirm they are not borrowed funds and ensure the gift letter meets all SBA requirements.
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.
More on gift/investor funds
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