SBA loan basics
Short answer
'Equity injection' is the SBA's term for the borrower's contribution of capital to the business project, which functions as a down payment, demonstrating the owner's commitment and reducing the loan amount.
The SBA requires borrowers to inject a minimum amount of their own capital into the business as part of the financing project. This injection typically needs to be at least 10% of the total project costs for business acquisitions, and it can come from various verified sources, not just cash.
For a $1,000,000 business acquisition, the SBA typically requires a minimum 10% equity injection, or $100,000, from the buyer. This could be in the form of cash, a seller note on full standby, or other eligible assets.
Insider move
Lenders verify the source and sufficiency of the equity injection to ensure it meets SBA requirements, is unencumbered, and represents a real contribution by the borrower to the project's success.
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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