SBA loan basics
Short answer
A valid equity injection can include unencumbered cash from personal savings, gifts, or a rollover of retirement funds (ROBS). It can also sometimes include the fair market value of existing business assets contributed by the buyer, or qualified seller financing on full standby.
SBA rules dictate that equity injection must demonstrate a true commitment from the borrower. Funds must be 'unencumbered,' meaning they are not borrowed from another source that requires repayment. Gifts must be irrevocable, and seller notes used for equity must be on 'full standby' (no payments for the life of the SBA loan or a minimum of 24 months, whichever is longer).
A borrower for a $1 million acquisition might provide $50,000 in cash from savings, receive a $50,000 irrevocable gift from family, and the seller might hold a $50,000 note on full standby. This totals a $150,000 (15%) equity injection.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
SBA Form 1919 - Borrower Information Form
FAQ Related to Recent SBA Procedural Notices
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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