Glossary · The loan itself
Cash-out refinance
In short
This is when you refinance an existing loan for a larger amount than currently owed, taking the difference in cash. It's often used with home equity but is generally not permitted with SBA 7(a) business acquisition loans.
What it means in a deal
You cannot use an SBA 7(a) acquisition loan to "cash out" equity from the business itself or from collateral you're bringing into the deal. The loan proceeds must be directly applied to the approved uses for the acquisition. Any equity injection must be "seasoned funds" and not round-tripped from the loan.
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 Cash-out refinance
- Can a cash-out refinance of my personal home count as equity injection for an acquisition?
- Can a borrower use a cash-out refinance from personal real estate for the equity injection?
- Can funds from a cash-out refinance of my investment property count towards my SBA 7(a) down payment?
- Can cash-out loan proceeds go to the remaining owner in a buyout?
- Are there specific restrictions on the maximum amount of cash-out allowed to the seller in an SBA 7(a) acquisition?
- If I am buying out a partner, does the SBA require the business to pass a cash flow test post-acquisition?
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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