SBA 7(a) Q&A
Short answer
While a 10% equity injection is generally required, the SBA does not mandate a specific minimum percentage that must be *liquid cash* from the borrower, but lenders typically prefer and require a substantial portion to be liquid and unencumbered.
The SBA's policy (SOP 50 10) emphasizes that the equity injection must be from unencumbered personal funds. While non-cash assets like contributed equipment or a seller note on full standby can count, the lender must determine that the borrower has sufficient liquidity to operate the business post-acquisition and meet initial expenses not covered by the loan.
For a $1,000,000 acquisition requiring $100,000 in equity, you might contribute $60,000 in cash, and a $40,000 seller note on full standby. The lender will assess if the $60,000 cash is sufficient for the immediate needs of the business.
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 2026-06-14. 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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