SBA loan basics
Short answer
An equity injection, often referred to as a down payment, is the borrower's own cash or eligible assets contributed to the business acquisition or project. It represents the borrower's personal stake in the business.
The SBA requires borrowers to contribute a minimum equity injection to demonstrate their commitment and reduce the overall risk. For business acquisitions, a minimum of 10% is typically required, though some lenders or riskier deals may require more. This injection can come from cash, eligible seller notes on full standby, or other qualified assets.
If Alex is buying a business for $1,000,000, he will typically need to contribute at least $100,000 (10%) as his equity injection. This could be cash from his savings or a combination of cash and a seller note structured to meet SBA's standby requirements.
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
SBA Form 1919 - Borrower Information Form
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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