SBA 7(a) Q&A
Short answer
Yes, funds from a second mortgage on your personal residence can typically be used for your equity injection, provided the funds are properly sourced and documented.
SBA rules permit equity injection from various sources, including funds borrowed against personal assets, as long as the loan is fully collateralized by personal assets (not business assets) and repayment does not come from the business's cash flow. The funds must be verified as part of the buyer's injection.
A buyer is acquiring a business for $700,000, requiring a $70,000 equity injection. They take out a $70,000 second mortgage on their unencumbered primary residence to fund this injection.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
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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