SBA loan basics
Short answer
For most business acquisitions, the SBA generally requires a minimum equity injection (down payment) of 10% of the total project cost. This injection often needs to be cash or cash equivalent.
For a change of ownership (acquisition) transaction, borrowers are usually required to inject at least 10% of the project costs as equity. This demonstrates the borrower's commitment and reduces the overall risk. The equity injection can come from various sources, including cash, standby seller notes, or sometimes, contributed assets, but the SBA has specific rules for each. For certain transactions or if goodwill is a large component, a higher injection might be required.
If you are acquiring a business for $500,000, and the total project cost is $550,000 (including fees), you would generally need to inject at least $55,000 (10%) as a cash down payment or equivalent to meet SBA requirements.
Insider move
Lenders meticulously verify the source and sufficiency of the equity injection to ensure it meets SBA requirements and comes from eligible, unencumbered sources. Inadequate or improperly sourced equity can lead to a guarantee repair or denial.
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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