Glossary · Your money in the deal
Unencumbered Fund
In short
This refers to cash or assets you provide for the equity injection that are free from any liens, pledges, or restrictions. The SBA requires your equity injection to be truly yours and not borrowed against other assets.
What it means in a deal
For your SBA 7(a) loan, your down payment (equity injection) must come from unencumbered funds. This means you can't use a loan against your home (like a HELOC) or other assets to fund it, unless that loan is fully subordinated to the SBA loan. Provide bank statements or brokerage statements showing clear ownership and seasoning of these funds.
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 Fund
- What if my equity injection includes funds from a personal loan secured by my unencumbered investment property?
- How does the SBA define 'unencumbered cash' for equity injection purposes?
- How does a lender verify equity injection funds originating from a personal loan secured by the borrower's unencumbered investment property?
- What exactly constitutes "unencumbered liquid assets" as a source for the required equity injection?
- Can an investor fund my SBA 7(a) down payment?
- How does life insurance effectively fund a business buy-sell agreement?
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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