Glossary · Your money in the deal
Borrower Equity
In short
The portion of the total project costs that the buyer contributes from their own funds, not financed by the SBA loan or seller. It demonstrates your commitment and reduces the lender's risk, typically requiring 10-20% for an SBA 7(a) loan.
What it means in a deal
The SBA requires a minimum equity injection, typically 10% for established businesses, which must come from verifiable, unencumbered sources. This often comes from personal savings or a seller note on "standby." Be prepared to provide clear documentation of your funds' origin and availability.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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 Borrower Equity
- Can a borrower's sweat equity count towards the required equity injection for a 7(a) loan?
- What documentation is needed to verify a borrower's equity injection when it comes from an existing business owned by the borrower?
- How does a lender verify the source of a borrower's equity injection funds?
- What specific documentation is required to verify equity from a borrower's personal real estate appraisal?
- Can a borrower use a cash-out refinance from personal real estate for the equity injection?
- How does a lender verify equity injection from a borrower's personal credit card cash advance?
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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