Summary: SBA 7(a) lenders typically require a 10 percent down payment on the total project cost for established businesses. Expect 15 percent for special-purpose properties and 20 to 25 percent for startups, first-time acquisition buyers, or single-purpose assets. The money must be real equity: cash, home equity, or a seller note on full standby. Borrowed funds that require repayment alongside the SBA loan do not count.
The down payment is where SBA loan dreams most often die, because borrowers confuse the SBA's flexibility with leniency. Ten percent down is real, and it is half of what conventional commercial lenders demand. But it must be your money, it must be documented, and in several common situations it is not ten percent at all. Here is the full picture.
For an established business borrowing for a standard purpose, office, warehouse, equipment, working capital, the 7(a) down payment is 10 percent of total project cost, not 10 percent of the loan. On a $600,000 project, that is $60,000 in, $540,000 financed. Project cost includes everything: purchase price, closing costs, initial working capital, and fees you are not financing. Borrowers who budget 10 percent of the loan amount come up short at closing.
The 504 program holds the 10 percent line even where the 7(a) does not, which is one reason real estate buyers prefer it. On a 504, the structure is explicit: 50 percent bank, up to 40 percent CDC debenture, 10 percent borrower.
Three situations push the requirement up. First, special-purpose properties: car washes, gas stations, hotels, restaurants, and anything a lender cannot easily sell to another buyer. Expect 15 percent minimum, sometimes 20. Second, startups: with no track record, lenders want 20 percent or more to prove commitment. Third, first-time business buyers: even buying an established company, a buyer with no ownership history typically needs 15 to 25 percent down because the lender is underwriting the jockey, not just the horse.
Single-purpose equipment gets similar treatment. A CNC machine with a liquid resale market might qualify at 10 percent; a custom food-processing line with one plausible buyer might need 25. The lender is always asking one question: if this goes wrong, what can I sell and to whom?
Cash is king: savings, investment accounts, and home equity all count, documented with statements. A seller note on full standby counts toward the equity injection, meaning the seller agrees in writing to receive no payments until the SBA loan is current; this is common in acquisitions and effectively lets the seller finance part of your down payment. Gifts count if they are documented as gifts with no repayment expectation.
What does not count: borrowed money that must be repaid alongside the SBA loan, including most investor loans and credit lines. Retirement account funds can count if properly rolled over through a ROBS structure, but that adds cost and complexity most borrowers should avoid. And the down payment cannot come from the business being purchased; that is circular and prohibited.
If you are short, you have legitimate options. A seller standby note is the cleanest: negotiate the seller to carry 5 to 10 percent of the price on standby, cutting your cash need in half. State and local economic development grants, where available, can sometimes count as equity. And buying a smaller first deal, proving yourself, and trading up later beats overleveraging into a deal you cannot survive.
What you should not do: borrow the down payment on a credit card or personal loan and hope the lender does not notice. They will notice. The personal financial statement and bank statements are designed to catch exactly this, and getting caught ends the application and burns the lender relationship.
Typically 10 percent of total project cost for established businesses and standard purposes. Startups, special-purpose properties, and first-time buyers should expect 15 to 25 percent.
Yes, if it is on full standby: the seller receives no payments until the SBA loan is current. This is common in business acquisitions and must be documented in the loan file.
No. Borrowed funds that require repayment alongside the SBA loan do not count as equity injection. The down payment must be cash, equity, gifts, or standby seller financing.
Of the total project cost, which includes the purchase price plus closing costs, fees, and initial working capital. Budget on the project, not the loan.
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Figures: 2026. Sources: the Small Business Administration (sba.gov), SBA Information Notice 5000-872051 (FY2026 fee schedule), SBA SOP 50 10, and the Wall Street Journal prime rate via Bankrate. This page is for planning only and is not financial, tax, or legal advice. Verify with the cited source or a qualified professional.