SBA loan basics
Short answer
Beyond cash, acceptable forms of equity injection include readily marketable assets, certain standby seller notes, and sometimes the appraised value of owned real estate or equipment that will be used in the business.
The equity injection can come from various sources as long as it demonstrates a true investment by the borrower. This includes cash, unencumbered assets valued at their net equity (like real estate or equipment introduced to the business), and a seller's note provided it is on full standby for the life of the loan and meets specific SBA requirements.
A buyer is injecting 15% equity for a $1,000,000 acquisition. They contribute $50,000 in cash, and the seller agrees to a $100,000 note that will be on full standby (no payments) for the life of the SBA loan, totaling a 15% equity injection.
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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