SBA loan basics
Short answer
The SBA requires lenders to verify the source of all funds for your equity injection to ensure they are unencumbered and truly from an eligible source.
Lenders typically require bank statements showing the funds in your account for a period (e.g., 90 days), or documentation for recent deposits like gift letters, personal loan agreements (if on standby), or sale of assets. This prevents hidden debt or ineligible sources from being counted as equity.
A borrower claims a $50,000 cash injection. The lender requests 3 months of bank statements to show the funds were consistently in the account, or if it was a recent large deposit, a gift letter from a family member and their bank statement proving the source.
Insider move
Lenders meticulously trace the origin of funds to prevent 'circular financing' (borrowing funds that are presented as equity) or other ineligible sources. Proper documentation is crucial to ensure the SBA guarantee is not jeopardized.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. 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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