Glossary · Your money in the deal
Unencumbered Equity
In short
This refers to assets, like real estate or marketable securities, that are owned outright and not pledged as collateral for other debts. The SBA allows some equity injection to come from unencumbered equity.
What it means in a deal
If you're using personal assets (like your home's equity or investment accounts) for your down payment, they must be unencumbered. You can't use equity already tied up in another loan. Lenders will verify this through appraisals, lien searches, and brokerage statements to confirm the assets' true value and availability.
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 Equity
- 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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