SBA loan basics
Short answer
It depends, but a loan from a relative can count towards your down payment if it's on 'full standby' terms, meaning no payments are made until the SBA loan is repaid.
For a loan from a relative (or any third party) to count as equity, it generally must be on 'full standby.' This means the relative agrees to make no principal or interest payments for the full term of the SBA loan, or at least until the SBA loan is fully repaid. This ensures that the business's cash flow is not diverted to service this additional debt and protects the senior position of the SBA-guaranteed loan.
A business owner needs $20,000 for their down payment and borrows it from a parent. If the parent signs a standby agreement stating they will not receive any payments until the SBA loan is fully satisfied, then the $20,000 counts as equity. If the parent expects monthly payments, it would not count.
Insider move
Lenders carefully review standby agreements to ensure they meet SBA requirements. They verify that no payments (principal or interest) are due to the relative for the duration of the SBA loan, protecting the borrower's ability to repay the senior debt.
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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