Glossary · Your money in the deal
Unencumbered Source
In short
This means funds or assets for your equity injection that are free and clear of any liens, pledges, or claims by other creditors. The SBA requires your injection to come from such sources.
What it means in a deal
Your lender will require proof that your equity injection funds are from an unencumbered source, meaning they aren't borrowed against another asset or from a loan that requires repayment. This ensures you have true "skin in the game." Provide bank statements or other documentation to verify.
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 Source
- What exactly constitutes "unencumbered liquid assets" as a source for the required equity injection?
- How does the SBA define 'unencumbered cash' for equity injection purposes?
- 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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