Glossary · Your money in the deal
Unencumbered Cash
In short
Cash that is free from any liens, pledges, or restrictions. The SBA requires a buyer's equity injection to be unencumbered to ensure it's truly "at risk."
What it means in a deal
Your cash down payment must be verifiable as unencumbered. This means it can't be borrowed against other assets or subject to any claims. Lenders will require bank statements and potentially gift letters to confirm your funds are truly available and free of obligations.
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 Unencumbered Cash
- How does the SBA define 'unencumbered cash' for equity injection purposes?
- What exactly constitutes "unencumbered liquid assets" as a source for the required equity injection?
- What if my equity injection includes funds from a personal loan secured by my unencumbered investment property?
- What percentage of the equity injection must be unencumbered liquid assets for a $1,000,000 business acquisition?
- Can an equity injection be comprised of unencumbered business assets already owned by the borrower prior to the acquisition?
- How does a lender verify equity injection funds originating from a personal loan secured by the borrower's unencumbered investment property?
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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