Glossary · Your money in the deal
Retained equity
In short
The portion of the seller's ownership in the business that they keep after the sale. This is uncommon in SBA 7(a) deals, as the SBA generally requires a complete change of ownership.
What it means in a deal
While rare, if a seller retains equity, it complicates the SBA's 'change of ownership' rules and can trigger affiliation concerns if the seller retains 'undue control.' The SBA wants the buyer to fully own and operate the business. Generally, avoid structures where the seller retains equity in an SBA deal.
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 Retained equity
- Can a business's retained earnings count as equity injection?
- Can I use my business's retained earnings from a prior venture as equity injection?
- If the seller holds a minority stake (e.g., 5%) after the acquisition, does their retained equity count towards my 10% injection?
- How does the SBA view a seller's retained ownership after an acquisition?
- How does the SBA handle a seller's retained ownership in a change-of-ownership transaction?
- How does the SBA handle a seller's retained ownership in a 7(a) change-of-ownership transaction?
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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