Glossary · People and paperwork
Source-of-Funds Verification
In short
The process of proving where your down payment and working capital funds originated. The SBA requires this to ensure your equity injection is legitimate and unencumbered.
What it means in a deal
Lenders will ask for bank statements, brokerage statements, and potentially gift letters or tax returns to verify your funds. They need to see a clear paper trail showing the money is truly yours and not borrowed or "round-tripped." Be prepared to provide detailed documentation for all funds used in the acquisition.
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 Source-of-Funds Verification
- How does the SBA verify the source of my equity injection funds?
- What documentation is required to prove the source of my equity injection funds?
- What specific documentation is required to verify the source of my equity injection funds?
- How does a lender verify the source of a borrower's equity injection funds?
- How does the SBA verify the source and availability of my equity injection funds?
- How does the SBA 7(a) loan process verify the source of gifted equity injection funds?
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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