Last reviewed October 19, 2026 · 5 min read
“Equity injection” is the cash or other qualifying equity the borrower contributes to a project. It demonstrates the owner’s commitment and reduces the lender’s risk.
When it is required
For SBA 7(a) loans, SBA rules generally require an equity injection of at least 10% of total project costs for start-ups and complete changes of ownership. For SBA 504 projects, the borrower contribution is typically at least 10% and can be higher for start-ups or special-purpose properties. Lenders may set higher requirements based on their own credit judgment.
Typical sources
- Cash from personal savings or business funds, documented with bank statements
- Gifts, when properly documented as gifts rather than loans
- Equity from investors, subject to SBA ownership and guarantee rules
- Certain seller financing, under strict standby conditions
Borrowed funds generally cannot serve as equity unless repaid from sources other than the business, and lenders verify where the money came from.
Seller notes
In a change of ownership, a seller note may count toward no more than half of the required injection, and only if it is on full standby — no principal or interest payments — for the life of the SBA loan.
Sources
This article is for general educational purposes and is not legal, tax, or financial advice. Sapphire Holdings is not a lender and is not affiliated with the U.S. Small Business Administration. Program rules change; confirm current requirements with your lender.