SBA 7(a) Q&A
Short answer
While the overall minimum equity injection is typically 10% of total project costs, the SBA generally requires a significant portion of this to be cash. A seller note on standby can make up the remainder.
The SBA's minimum equity injection requirement is usually 10%, but for change of ownership transactions, it often looks for a cash injection from the buyer of at least 10% of the project cost, with a seller note potentially covering additional equity if structured correctly on full standby.
For a $1,000,000 business acquisition, a buyer would typically need to inject at least $100,000. This could be $100,000 cash, or $75,000 cash and a $25,000 seller note on full standby.
Insider move
Lenders want to see sufficient cash commitment from the buyer to demonstrate their personal stake and ensure the business is not over-leveraged. They will scrutinize the source of cash and ensure it's unencumbered.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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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