SBA loan down payment requirements (2026)
SBA down payment (equity injection) rules under SOP 50 10 8.1: 10% for start-ups and purchases, 10% to 20% for 504, what counts and how it is verified.
Published · 8 min read · By the AceTheSBA team
Key points
- 7(a) start-ups (operating one year or less) and business purchases need an equity injection of at least 10% of total project costs, not 10% of the loan.
- 504 projects need at least 10%, 15% for a new business or special-purpose property, and 20% if both apply.
- For existing businesses that are not start-ups or purchases, SBA sets no fixed minimum; the lender decides.
- In a business purchase, seller notes on full standby and similar limited sources can cover no more than half of the required injection.
- Lenders verify the cash with at least 30 days of bank statements before releasing any loan money. A gift letter alone is not enough.
SBA calls a down payment an equity injection: the money the owners put into the project themselves. How much you need depends on the program and on whether you are starting, buying or expanding a business.
7(a) loans
| Situation | Minimum equity injection |
|---|---|
| Start-up (operating and earning revenue for one year or less) | 10% of total project costs |
| Initial acquisition (buying a business you do not already own) | 10% of total project costs; cannot be reduced |
| Business expansion or owner buyout | 10% (owner buyout: of the purchase price); the lender may reduce or waive it if the business has enough liquidity and working capital and no negative net worth |
| Existing business, not a start-up or purchase | No fixed SBA minimum; the lender decides |
Total project cost means everything required to become operational or to complete the purchase, whatever the source of funds, except lines of credit and 504 loans. If a start-up’s total project is $400,000, the injection is at least $40,000, even if the SBA loan is only $300,000 and other financing covers the rest.
504 loans
| Situation | Minimum contribution |
|---|---|
| Standard project | 10% |
| New business (operating two years or less) or limited or special-purpose property | 15% |
| New business and special-purpose property | 20% |
In a standard 504 project, a bank provides at least 50%, the Certified Development Company (CDC) up to 40% and the borrower at least 10%. The 504 contribution may be borrowed if it is subordinate to the bank loan and the 504 debenture.
What counts as equity
Under SOP 50 10 8.1, eligible sources include:
- Cash that is not borrowed, including a gift
- A personal loan repaid from a source other than the business’s cash flow (your salary from the business does not count)
- Grants with no repayment or clawback during the loan
- Prepaid expenses the lender verifies
- Equity investments that cannot be repaid before SBA’s guaranty is released
- Outside a business purchase, assets other than cash, independently valued when above net book value
Fees for education, advisory services or agents do not count as equity.
Business purchases: the seller note limit
In a change of ownership, some sources are limited:
- Debt on full standby
- Seller debt subordinated to the lender and on full standby (no principal or interest payments for the term of the SBA loan)
- Investments by a non-controlling minority investor (under 20% ownership, no control)
Together these can provide no more than half of the required injection. On a $1,000,000 purchase with a 10% ($100,000) requirement, a full-standby seller note can supply up to $50,000; the other $50,000 must come from unlimited sources such as your own cash.
Any purchase price above the business valuation must be paid with equity, because total debt is limited to the valuation.
How lenders verify it
Except for SBA Express, the lender verifies the injection before disbursing any loan money, with:
- A copy of the check or wire and proof it went into the borrower’s account or escrow
- The most recent statements, covering at least 30 days, of the account the money came from, showing it was there
- A statement showing the deposit, or a settlement statement showing the cash was used
A promissory note, gift letter or financial statement on its own is not enough. Large unexplained deposits shortly before you apply will be questioned, so move and document money early.
Planning your injection
- Add up your total project costs, not just the loan.
- Apply the right percentage for your program and situation.
- List each source and the evidence you will provide.
- If you are buying, check that limited sources are no more than half.
- Keep the cash in a documented account at least 30 days before you apply.
This article reflects SBA SOP 50 10 8.1, effective October 1, 2026, and 13 CFR 120.910. Lenders may require more than SBA’s minimums.