SBA loan basics
Short answer
An equity injection typically consists of cash from the borrower, unencumbered assets, or a seller note on full standby.
The SBA accepts various forms for the required equity injection, provided they are truly "at risk" and unencumbered. Cash from personal savings is common. Unencumbered assets (like equipment or real estate) contributed at fair market value can count. A seller note can count if it's on "full standby," meaning no payments are made until the SBA loan is fully repaid, acting as a form of deferred equity.
For a $1 million acquisition, a borrower contributes $100,000 cash, $55,000 worth of unencumbered vehicles, and the seller agrees to a $45,000 note on full standby, meeting a 20% injection requirement.
Insider move
Lenders verify the source and liquidity of cash, the fair market value and unencumbered status of assets, and that any seller note meets the strict standby requirements to count as equity.
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 2026-06-13. 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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