An SBA equity injection is the money you put into the project yourself to get an SBA loan. Under the SBA's current rulebook (SOP 50 10 8.1, effective October 1, 2026), a startup with one year or less of revenue must inject at least 10% of the total project cost on a 7(a) loan, and the purchase of a business also requires a 10% minimum. On a 504 loan, the injection is 10%, 15% or 20% depending on the case.
Many owners find out about this requirement late, after they've already negotiated a lease or a deal to buy a business. Below we explain how much is required in each situation, which sources of money the SBA accepts, how the bank verifies it and what to do if you don't have it. This rule has changed several times in recent years, so always confirm with your lender which version of the SOP applies to your application.
Key takeaways
- Startup (one year or less of revenue): minimum injection of 10% of the total project cost on a 7(a).
- Initial purchase of a business: 10% minimum, and the SBA doesn't allow it to be reduced or waived.
- On a 504, the injection is 10%; 15% for a new business or a special-purpose property; 20% if both apply.
- Accepted: unborrowed cash (including gifts), personal loans repaid from another source, and debt on full standby.
- A loan the business itself repays doesn't count, and neither does a gift letter without the bank trail.
- The lender verifies the injection before disbursing, using at least 30 days of statements and proof of the transfer.
What an equity injection is and why the SBA requires it
The SBA doesn't lend the money itself. It backs part of a loan your bank makes. In return, it wants you to have skin in the game too. That stake is the equity injection, also called the borrower's contribution.
Beyond the fixed minimums, the lender (or the SBA on non-delegated loans) has to decide whether the business has enough equity in it. To do that, it looks at your equity position, the required injection and your debt-to-worth ratio after the loan, adjusted for the type of business, your experience and the competition in your market. That's why a bank can ask for more than the minimum even when the rule says 10%.
For the full program picture, read our guide to the SBA 7(a) loan.
How much you need to put in, case by case
| Situation | Minimum injection | Calculated on | Can it be reduced? |
|---|---|---|---|
| Startup (1 year or less of revenue), 7(a) | 10% | Total project cost: everything needed to start operating | No |
| Initial purchase of a business | 10% | Total project cost | No |
| Expansion, or purchasing a partner's ownership stake | 10% | Project cost; for a partner's stake, the purchase price | Yes, if the lender sees enough liquidity and no negative net worth |
| 504 loan, general case | 10% | Project cost | No |
| 504 with a new business (2 years or less) or special-purpose property | 15% | Project cost | No |
| 504 with a new business and special-purpose property | 20% | Project cost | No |
| SBA Express | Lender decides | Lender's own policy | Not applicable |
Details that matter:
- Loans made more than 90 days apart are treated as separate projects for the startup calculation.
- Special-purpose properties on a 504 include, among others, hotels and motels, gas stations, car washes, hospitals and medical facilities, nursing homes, cold storage, funeral homes with crematoriums, and auto shops with pits and lifts.
- Business purchases that include real estate: the property carries the same injection; if it's split into two loans, the injection is split proportionally.
- ESOPs buying at least 51% of the company have no SBA injection requirement.
Worked examples
These examples are illustrative only; your lender can ask for more:
| Example | Project cost | Minimum injection |
|---|---|---|
| New restaurant: first rent, build-out, equipment and opening capital | $300,000 | $30,000 (10%) |
| Buying an operating auto repair shop | $800,000 | $80,000 (10%), up to $40,000 of which can be a seller note on full standby |
| Buying your business's building with a 504 (5-year-old business) | $1,200,000 | $120,000 (10%) |
| Motel bought with a 504 by a new business | $2,000,000 | $400,000 (20%) |
Pay attention to the base. For a startup, the 10% is calculated on everything you need to operate, wherever each dollar comes from, not just on the loan. If the bank lends $270,000 and you put in $30,000, the project cost is $300,000 and your injection meets the minimum exactly. If you're weighing the SBA for a brand-new company, read SBA loans for startups.
Where the money can come from (and where it can't)
Sources the SBA accepts without a cap:
- Cash that isn't borrowed, in the business account or from other sources, including a gift from a family member.
- A personal loan you can show will be repaid from a source other than the business's cash flow. Careful: a salary you pay yourself from the same business doesn't count as another source.
- Eligible prepaid expenses the lender verifies with paid invoices, cleared checks or bank statements. Education, consulting and fees paid to an agent don't count.
- For startups, non-cash assets you contribute, like equipment or land, with an independent appraisal if they're worth more than book value.
Limited sources (on business purchases, together they can cover at most half of the required injection):
- A seller note that's subordinated and on full standby: no principal or interest payments for the entire life of the 7(a) loan.
- Other debt on full standby, documented with the SBA standby form or an equivalent.
- Minority investors with less than 20% of the business and no control, with no arrangement to recover their investment before the SBA's backing is released.
What doesn't count: a loan or advance the business itself will repay, and any "investment" that must be returned early, because the SBA treats it as debt.
How the lender verifies your injection
Except on SBA Express, the lender must verify the injection before disbursing any part of the loan. For a cash injection, the rules call for:
- A copy of the check or wire, with proof it was processed and the money landed in the business account or an escrow account.
- Recent bank statements covering at least 30 days for the account the money came from, to show it was available.
- A business account statement showing the deposit, or a closing statement showing how the cash was used.
A gift letter, a promissory note or a financial statement isn't enough on its own: it needs that bank trail. A practical tip: if a relative is gifting you money, have them transfer it early, account to account, and keep statements from both sides. Avoid large last-minute cash deposits you can't explain. If you're buying a business, read how to buy a business with an SBA loan.
Who can apply, and what to do if you're short
Citizenship rule. Since March 1, 2026 (SBA Procedural Notice 5000-876626), 100% of the direct and indirect owners of an SBA 7(a) or 504 applicant, and their guarantors, must be U.S. citizens or U.S. nationals whose principal residence is in the U.S. Lawful permanent residents (green card holders) can no longer own any share. If your situation is different, talk to an immigration attorney about your case; we don't give immigration advice here.
If you're short on the injection, these are honest ways forward:
- Shrink the project: used equipment, a lighter build-out or opening in phases lowers the total cost, and the 10% with it.
- Negotiate a seller note on standby if you're buying a business, remembering it can cover only up to half of the injection.
- Bring in a minority partner who invests without taking control.
- Wait until you have more than a year of revenue if your project is an expansion rather than a launch.
- Look outside the SBA. If your business already operates and you need working capital or equipment without the SBA process, Merchant Fund Express, our recommended funder, reviews your sales and deposits, works with credit from FICO 500, accepts applicants with an ITIN (no SSN needed), offers Spanish-speaking support and often decides in 2 to 4 hours. Don't use it to fund an SBA injection: the SBA doesn't accept borrowed money the business repays.
Compare more paths in the best SBA loan alternatives. Prefer Spanish? Leer en español.
Common mistakes
- Calculating 10% of the loan instead of the project. The base is the total cost.
- Moving the money at the last minute. Without 30 days of history in the source account, the lender can't verify it.
- Counting a seller note that has payments. It only counts if it's on full standby for the life of the loan.
- Using a credit card or a business advance for the injection. It gets repaid from business cash flow, so it doesn't count.
- Paying a nonrefundable deposit before you know you qualify, especially if any owner doesn't meet the citizenship requirement.
Frequently asked questions
How much down payment do I need for an SBA loan?
It depends on the case. For a startup with one year or less of revenue, at least 10% of the total project cost on a 7(a). To buy a business, 10%, and that can't be reduced. On a 504, 10%, 15% or 20% depending on whether the business is new or the property is special-purpose. Your lender can require more.
Can I use money gifted by family as my equity injection?
Yes. The SBA accepts unborrowed cash from other sources, including a gift. But a gift letter alone isn't enough: the lender needs to see the transfer, at least 30 days of statements for the account the money came from, and the deposit into the business or escrow account.
Can the seller finance part of my injection?
Partly. A seller note can count toward the injection if it's subordinated to the bank and on full standby, with no principal or interest payments for the entire life of the 7(a) loan. On business purchases, that note plus other limited sources can cover at most half of the required injection.
Does an existing business need an equity injection for a 7(a)?
The fixed minimums apply to startups and business purchases. For a business with more than a year of revenue asking for working capital or equipment, the SBA doesn't set a percentage, but the lender has to confirm there's enough equity in the business and an acceptable debt-to-worth ratio, so it may still ask for a contribution.
Can I use Merchant Fund Express funding for my SBA injection?
No. The SBA doesn't accept borrowed money repaid from business cash flow as an injection. Merchant Fund Express is an alternative when you need working capital or equipment without the SBA process, not a way to meet an SBA injection. Build the injection from savings, documented gifts or minority partners.
Does the SBA require an equity injection on SBA Express loans?
SBA Express leaves the injection to the lender's own policy, and the SBA's pre-disbursement verification rule doesn't apply the same way. In practice, many banks still ask for a contribution on startups and acquisitions. Ask the lender for its requirement in writing before you sign anything.