SBA loan basics
Short answer
Equity injection can include cash, unencumbered business assets, seller notes on full standby, or certain third-party debt that is fully subordinated to the SBA loan.
The SBA defines eligible forms of equity injection to include cash, certain tangible assets (valued at their net book value or fair market value if independently appraised), and seller debt that is on 'full standby' (meaning no principal or interest payments for the life of the SBA loan). Third-party loans must also be fully subordinated with no payments during the SBA loan term to count.
For a $700,000 business acquisition requiring 10% equity: a buyer might contribute $40,000 in cash, and the seller might provide a $30,000 note that is on full standby for the life of the SBA loan, totaling the required $70,000 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
SBA Form 1919 - Borrower Information Form
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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