Glossary · Your money in the deal
Sweat equity
In short
Non-cash contributions to a business, such as the value of your labor, expertise, or intellectual property. The SBA generally does not allow this to count towards your equity injection.
What it means in a deal
While your hard work is valuable, the SBA typically requires your equity injection to be in cash or unencumbered assets. Sweat equity, like your efforts in improving the business post-acquisition, won't satisfy the minimum down payment requirement for a 7(a) loan. Focus on verifiable cash or seasoned funds.
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 Sweat equity
- How is 'sweat equity' or future services treated for an SBA 7(a) loan equity injection?
- Can sweat equity or future services I provide to the business count towards the required equity injection?
- Can a borrower's sweat equity count towards the required equity injection for a 7(a) loan?
- Can funds from a home equity line of credit be used for my equity injection?
- Can I use funds from a home equity line of credit for my 10% equity injection?
- Can funds from a private equity firm count as equity injection for an SBA 7(a) loan?
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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