Equity injection checker

The SOP 50 10 8.1 injection rules

For a complete change of ownership, SOP 50 10 8.1 requires an equity injection of at least 10% of total project cost, not 10% of the purchase price. Total project cost includes the price plus working capital financed in the deal, closing costs, and the SBA guaranty fee, so the requirement is usually a little larger than buyers first expect.

• Cash counts, and lenders verify it with bank statements showing the funds are yours and seasoned.
• Borrowed funds (a HELOC, for example) can count, but only when repayment comes from a source outside the business being bought, and the lender documents that. A salary the business pays you does not qualify as an outside source.
• A seller note on full standby (no payments for the SBA loan term) is a limited source, and limited sources together can count for at most half of the requirement. The other half must come from unlimited sources such as cash.

Expect the lender to paper all of it: statements, standby agreements, and the source of any borrowed money. An injection that cannot be documented does not exist as far as underwriting is concerned.

Why the standby cap bites

A generous seller note feels like it should cover the down payment, but the cap means a 10% requirement can never be more than half satisfied by standby debt. On a project with a $140,000 requirement, a $200,000 standby note still leaves $70,000 that must arrive as cash or qualifying borrowed funds. The checker shows the capped figure explicitly so the gap is visible before a lender points it out.

Structure moves that close a gap

If the checker reads SHORT: raise cash, convert part of the seller note to standby (up to the cap), reduce working capital financed in the project, or revisit the price. The Deal Analyzer runs the same injection logic alongside DSCR, so you can watch both constraints while you move the levers.