SBA 7(a) Q&A
Short answer
No, cash left in the business by the seller after closing generally does not count towards the buyer's required equity injection.
Equity injection must come from the buyer's verifiable unencumbered funds or eligible third-party sources. Cash left in the business by the seller, even if intended for working capital, is typically considered a form of seller financing (akin to a seller note) and would need to be on full standby if it were to contribute to the equity requirement.
A buyer acquires a business for $700,000 and needs a $70,000 equity injection. If the seller leaves $30,000 cash in the business post-closing, this $30,000 cannot satisfy the buyer's cash injection requirement. The buyer still needs to inject their own $70,000 (or $35,000 cash + $35,000 standby seller note).
Lenders must ensure that equity injection comes from acceptable sources and is clearly documented as the buyer's contribution. Seller-retained cash or seller financing must meet strict standby requirements to qualify as equity, which 'cash left in the business' typically does not.
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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