SBA 7(a) Q&A
Short answer
Acceptable sources include cash from the sale of personal assets, gifts from family members, or a loan secured by non-personal assets, provided funds are unencumbered.
The SBA requires equity injection funds to be unencumbered and verifiable. This means funds cannot be borrowed against the business being acquired or from sources that would impair the borrower's ability to repay the SBA loan. Gifts require a gift letter.
A buyer uses $50,000 from the sale of a personal vehicle, $25,000 gifted by a parent (with a gift letter), and $25,000 from their savings account to meet a $100,000 equity injection.
Lenders meticulously trace the source of all equity injection funds. They require documentation like bank statements, gift letters, or sales agreements to prove the funds are legitimate, unencumbered, and from eligible sources.
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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