An SBA 7(a) loan requires an equity injection (down payment) of at least 10% of total project costs when the business is a startup (one year or less generating revenue) or when the loan is used to buy a business. For an established business that is not buying another one, the SBA sets no minimum and the lender decides. The 504 program requires 10% to 20%, depending on how old the business is and the type of building. That is what the SBA's SOP 50 10 8.1, in effect since October 1, 2026, and federal rule 13 CFR 120.910 say.
Below you will find each case, which money the SBA accepts as equity (and which it does not), worked examples, how to document it, and what to do if you have not saved it up yet.
Key takeaways
- 7(a) for a startup: at least 10% of the total cost to open the doors.
- 7(a) to buy a business: 10%, and on a first acquisition it cannot be reduced.
- 504: 10% in general, 15% if your business is 2 years old or less or the building is special-purpose, and 20% if both apply.
- Borrowed money almost never counts as equity; seller notes count only on full standby.
- Since March 1, 2026, 100% of the owners of a 7(a) or 504 applicant must be U.S. citizens or U.S. nationals.
- If you do not qualify for SBA, Merchant Fund Express reviews sales and deposits and does not require collateral in most cases.
SBA 7(a) down payment, case by case
The SOP 50 10 is the rulebook SBA lenders follow. Version 8.1, effective October 1, 2026, sets these minimums for the standard 7(a):
| Situation | SBA minimum equity injection | Can it be reduced? |
|---|---|---|
| Startup (1 year or less generating revenue) | 10% of total project costs | No |
| Business acquisition (first acquisition) | 10% | No |
| Expansion by acquisition or partner buy-in of a co-owner's stake | 10% | Yes, if the lender confirms you have enough liquidity and working capital |
| Established business (working capital, equipment, remodel) | No fixed SBA minimum | The lender weighs your capital and debt levels |
| SBA Express | Lender's discretion | Per lender policy |
Two important details. For a startup, "total project costs" means everything needed to open and operate, wherever the money comes from, except lines of credit and 504 loans. And to reduce the injection on an expansion or a co-owner's stake, your balance sheet cannot show negative equity at your last fiscal year-end. For the bigger picture, see our SBA 7(a) loan guide.
SBA 504 down payment
The 504 finances large fixed assets: land, buildings and long-life machinery. Per the SBA, a typical project is structured like this: a bank lends up to 50% with a first lien, a Certified Development Company (CDC) lends up to 40% backed by the SBA, and you put in at least 10%.
Federal rule 13 CFR 120.910 raises that minimum in two cases:
- 15% if your business has operated for 2 years or less.
- 15% if the project is a limited- or special-purpose building (for example, a property designed for only one type of business).
- 20% if both conditions apply.
- 10% in every other case.
Your contribution can be cash, or land that is part of the project. To weigh both programs side by side, read SBA 7(a) vs. 504.
Worked examples
These are illustrative examples only, to show how the down payment is calculated. They do not include interest or fees, and your lender can ask for more than the minimum.
| Example | Total project cost | Minimum percentage | Minimum down payment |
|---|---|---|---|
| For example, opening a new bakery with a 7(a) | $200,000 | 10% | $20,000 |
| For example, buying an existing auto shop with a 7(a) | $500,000 | 10% | $50,000 |
| For example, buying a storefront with a 504, business 6 years old | $1,000,000 | 10% | $100,000 |
| For example, the same storefront with a 504, business 18 months old | $1,000,000 | 15% | $150,000 |
| For example, a special-purpose building with a 504, business 18 months old | $1,000,000 | 20% | $200,000 |
Look closely at the bakery: total project cost is not just what you borrow. It includes equipment, build-out, the lease deposit, opening inventory and working capital for the first months. If you underestimate the project, you also underestimate the down payment, and the gap usually shows up at closing, when it is hardest to fix.
What counts as a down payment (and what does not)
The SBA's SOP accepts these as an equity injection, among others:
- Cash that is not borrowed, from the business or another source, such as a family gift.
- A personal loan, only if you show you will repay it from a source other than the business's cash flow. The salary your own business pays you does not count.
- Project costs already paid, if the lender verifies them with paid invoices, cleared checks or bank statements.
- Non-cash assets, with an independent appraisal when their value exceeds book value.
- Debt on full standby: debt that receives no principal or interest payments for the entire term of the 7(a) loan. This includes a seller note in an acquisition.
In a business acquisition, "limited" sources, such as standby debt, seller notes and certain minority investments, can cover at most half of the required injection. The rest has to come from sources like your own cash.
What does not count: an advance or business loan repaid from the same business's sales. The lender has to verify your injection before disbursing, so keep statements that show where every dollar came from. Our guide on how to buy a business with an SBA loan walks through the acquisition process.
How to prove your down payment to the lender
Under current rules, the lender must verify the injection before releasing loan funds and keep the proof in its file. If it cannot document it, the loan is delayed or falls apart. Prepare these from the start:
- Several months of bank statements showing the money building up, not a large unexplained deposit at the last minute.
- A signed gift letter if a relative is giving you part of the down payment, with the transfer visible in both accounts.
- Paid invoices and receipts for what you have already invested: lease deposit, permits, equipment or build-out.
- An independent appraisal if you contribute equipment or assets valued above book value.
- A signed standby agreement if part of the injection is a seller note or other creditor note, with a copy of the note.
A practical tip for owners who handle a lot of cash: deposit your full sales into the business account for months before you apply. Money that never touches the bank is hard to trace and does not help you prove either your down payment or your ability to repay.
Who can get an SBA loan in 2026
Before you save for the down payment, confirm you can apply. Since March 1, 2026 (SBA Procedural Notice 5000-876626), the SBA requires 100% of the direct and indirect owners of a 7(a) or 504 applicant, and any guarantors the SBA requires, to 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 of the business on an SBA application.
If you or a partner do not meet that rule, the down payment is no longer the problem: you need a different route. This guide is not immigration advice; talk to an immigration attorney about your situation.
Other basics the lender reviews: that your business is eligible and operates in the U.S., that its cash flow can repay the loan, your credit history and, depending on the amount, collateral.
What to do if you do not have the down payment yet
- Shrink the project. Start with used equipment or a smaller space and lower the total cost.
- Negotiate with the seller. In an acquisition, a seller note on full standby can cover part of the injection, up to half.
- Document what you have already paid. Deposits, permits and paid-off equipment can count if you have the receipts.
- Save on a plan. Run your sales through a business account and set aside a percentage every week.
- Compare other routes. If your business already has sales and you need working capital now, Merchant Fund Express, our recommended funder, reviews sales and deposits from a 500 FICO, does not require collateral in most cases, offers Spanish-speaking support and accepts ITIN applicants. It costs more than an SBA loan, so use it for what is urgent, not for the down payment itself: the SBA does not accept borrowed money that is repaid from business cash flow.
If you want a quote to compare, you can apply here; it is free and does not impact your credit. For down payments on non-SBA loans, read how much down payment a business loan requires. Leer en español
Frequently asked questions
What is the minimum down payment for an SBA 7(a) loan?
At least 10% of total project costs if your business is a startup or you are buying a business. If you already operate and are not buying another business, the SBA sets no minimum and the lender decides. On a 504, it is 10% to 20% depending on the age of the business and the type of building.
Can I get an SBA loan with no down payment?
Sometimes. An established business borrowing for working capital or equipment has no fixed SBA minimum, though the lender can still ask for one. On expansions and partner buy-ins, the lender can reduce or waive the 10% if you have enough liquidity. For a startup or a first acquisition, the 10% cannot be waived.
Does a seller note count toward the SBA down payment?
Only if it is on full standby, meaning no principal or interest payments for the entire term of the 7(a) loan. And in a business acquisition, those limited sources can cover at most half of the required injection; the rest must come from sources like your own cash.
Can I use a family gift as my down payment?
Yes. The SBA's SOP accepts cash that is not borrowed, including a gift. The lender will ask you to document where the money came from, for example with a signed gift letter and bank statements that show the transfer leaving their account and arriving in yours.
How much down payment does a 504 loan need to buy a building?
Under 13 CFR 120.910, at least 10% in general, 15% if your business is 2 years old or less or the building is special-purpose, and 20% if both apply. The bank usually covers up to 50% and the CDC up to 40%.
What are my options if I do not qualify for an SBA loan?
If your business already has sales, Merchant Fund Express reviews sales and deposits from a 500 FICO, funds $5,000 to $5,000,000, and applying is free with no impact to your credit. It costs more than SBA, so use it for short-term needs. Local CDFIs are another lower-cost option worth checking.