SBA 7(a) Q&A
Short answer
No, a seller's retained equity stake in the acquired business does not count towards the buyer's required 10% equity injection.
The equity injection requirement specifically refers to new capital injected by the buyer(s). Retained equity by the seller, even if they become a minority owner, represents existing capital within the business and is not considered a new injection by the acquiring party. The SBA requires the buyer to bring new cash or unencumbered assets to the transaction.
A buyer is acquiring 95% of a $1,000,000 business, with the seller retaining 5% equity. The buyer still needs to contribute a minimum of $100,000 (10% of $1,000,000) from their own resources, separate from the seller's retained share.
Insider move
Lenders strictly verify that the buyer's equity injection consists of new, unencumbered funds or assets. They ensure that no portion of the equity is derived from the seller's retained interest or other arrangements that do not represent a true injection of new capital by the buyer.
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 what counts toward 10%
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