Glossary · Your money in the deal
Borrowed funds
In short
These are funds you've taken as a loan, often from a friend or relative, to contribute to your equity injection. The SBA has strict rules about using borrowed funds for your down payment.
What it means in a deal
Borrowed funds are generally not allowed for the equity injection unless they are on full standby agreement and from a source not affiliated with the seller. If you use a Home equity line of credit (HELOC), it must be unencumbered from other liens.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Borrowed funds
- Can personal funds borrowed against assets not being acquired count as my equity injection?
- Can personal funds borrowed from a credit union against personal assets count towards my equity injection?
- What are the eligibility requirements for funds borrowed from a third party to count as equity injection?
- How do I show that my down payment funds actually belong to me and are not borrowed?
- Can funds borrowed against my personal brokerage account be used for the SBA 7(a) equity injection?
- Can I use borrowed funds from a personal unsecured loan for my equity injection if I commit to repaying it later?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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