SBA loan basics
Short answer
Acceptable forms of equity injection include cash from personal savings, gifts from eligible sources, seller notes on full standby, or certain assets contributed at fair market value.
The SBA requires the equity injection to be from unencumbered sources. Cash from savings accounts, gifts from immediate family (with proper documentation), and certain seller notes that are fully subordinated to the SBA loan and remain on full standby for the life of the loan are common forms. Valued assets injected into the business can also count.
A borrower uses $50,000 from their personal checking account, receives a $25,000 gift from their parents, and the seller agrees to a $25,000 note on full standby. This total $100,000 could count towards a $1,000,000 project's 10% equity.
Lenders must rigorously verify the source and sufficiency of all equity injection funds. They ensure funds are truly unencumbered, properly documented (especially for gifts or seller notes), and meet SBA eligibility requirements, as insufficient or improperly sourced equity can lead to a guaranty denial.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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