Glossary · Your money in the deal
Unencumbered Funds
In short
Cash you contribute to the deal that is free from any liens, pledges, or other claims by third parties. The SBA requires your equity injection to come from these funds.
What it means in a deal
Your equity injection must be "unencumbered" and "seasoned" for the SBA to accept it. This means the funds cannot be borrowed against or have any strings attached. Lenders will verify the source and seasoning of these funds through bank statements and other documentation to ensure they are genuinely yours.
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 Funds
- What if my equity injection includes funds from a personal loan secured by my unencumbered investment property?
- How does a lender verify equity injection funds originating from a personal loan secured by the borrower's unencumbered investment property?
- 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 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?
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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