Free calculator
SBA equity injection planner
- Total project cost
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- Required equity injection
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- Most a standby note can cover
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- Standby note actually counted
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- Unborrowed cash you must fund
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- Total cash needed here
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- Valuation shortfall, if any
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- Indicative 7(a) loan
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- Cash you are short
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Arithmetic on figures you supply, implementing the Initial Acquisition rules in SOP 50 10 8.1 (effective 1 October 2026). It does not decide which of the four transaction types your deal is, does not model the reduction a lender may allow on a Business Expansion or Owner Buyout, and does not include closing costs or reserves. Lenders may require more than the SOP floor. Confirm your file with your lender.
What this works out
The equity injection question has four parts and buyers usually only model the first. This does all four.
- Total project cost. The purchase price plus any other use of proceeds in the loan request. This is the base the percentage applies to — not the purchase price, which is what most quoted "10% down" figures assume.
- The required injection. 10% of that base on an Initial Acquisition, which SOP 50 10 8.1 states cannot be reduced or eliminated. [1]
- The most a seller note can cover. Standby debt is a limited source, and limited sources are capped at half the injection in aggregate.
- The unborrowed floor. Whatever is left. This is the number that decides whether you can do the deal, and it is the one nobody quotes.
The valuation line is not decoration
The SOP requires the business valuation to support the purchase price regardless of how the debt is structured, and separately caps total debt at the valuation amount. Enter a valuation below your price and the calculator shows the shortfall as cash you must find on top of the injection — because that is exactly what happens.
This is the most common way a deal that looked financed stops being financed, and it usually surfaces late, because the valuation is commissioned by the lender after the LOI is signed. Modelling it early costs nothing.
Reading the result
If your unborrowed cash covers the floor, the injection works and the question moves to debt service — run it through the DSCR calculator, remembering that SBA requires at least 1.25 on a first acquisition plus a separate 1:1 test on global cash flow.
If it does not, the levers are real but limited. A lower price reduces every line at once. Funding less through the loan — a seller who leaves working capital in the business, for instance — reduces project cost and therefore the injection. A larger standby note helps only up to the half cap. And borrowed money can fund the unlimited half only where repayment demonstrably comes from outside the business. The low-cash guide works through each.
This is not your total cash requirement
It is the injection and any valuation gap. Legal fees, your own diligence spend, licence and permit costs and post-closing reserves all sit on top. Take the total from here into the cash-to-close calculator to see what you actually need on the day.
Frequently asked questions
Why is the injection calculated on project cost rather than purchase price?
Because SOP 50 10 8.1 says so. It requires the injection to be based on the total project cost of the business plus any additional use of proceeds included in the loan request. So closing costs and working capital funded by the loan raise the base the 10% is calculated on. Owner Buyout transactions are the exception — there the requirement is based on the purchase price in the sale agreement.
Why can only half come from a seller note?
Standby debt is a Limited Equity Injection Source, and the SOP states those sources may provide no more than half of the required injection, individually or in the aggregate. So on a 10% requirement a full-standby seller note tops out at 5% of project cost. The rest must come from an unlimited source — principally unborrowed cash.
Can I borrow the unlimited half?
Sometimes. The SOP permits cash from a personal loan to a guarantor as an unlimited source where repayment can be demonstrated to come from a source other than the cash flow of the business — and it says the salary the business pays the owner does not qualify. So outside income can fund it; the business itself cannot.
Does the 10% ever come down?
Not on an Initial Acquisition — a buyer who was not previously an owner or employee. The SOP states the requirement cannot be reduced or eliminated for that transaction type. On Business Expansion and Owner Buyout a lender may reduce or eliminate it where the borrower has sufficient liquidity and working capital, subject to a non-negative net worth at the last fiscal year-end.
What happens if the valuation comes in below the price?
You make up the difference in cash. The SOP requires the business valuation to support the purchase price regardless of how the debt is structured, and caps total debt at the valuation amount. So overpaying does not produce a bigger loan — it produces a bigger cheque, dollar for dollar. This calculator shows that gap separately.
Is this the total cash I need?
No. This is the injection and the valuation gap. Your own diligence spend, legal fees, licence and permit costs and post-closing reserves sit on top of it. Run the result through the cash-to-close calculator for the full requirement.
Sources cited on this page
Every mutable number on this page — program caps, tax rules, thresholds, filing deadlines — traces to one of these primary sources. Rules change; check the source before you act on the number.
- 1 U.S. Small Business Administration. SOP 50 10 8.1 — Appendix 15: 7(a) Changes of Ownership. https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs
Educational only — not a valuation, a loan pre-approval, or a lender's number. Confirm specific rules, rates, and forms with the relevant New York State agency, attorney, CPA, lender, or insurer before acting. The formulas behind this tool are documented on the methodology page.