Required equity and cash to close are different numbers
A quoted down-payment percentage does not describe the entire project. Transaction costs, opening cash, immediate equipment work, debt assumptions and valuation gaps can create additional needs. Start with the complete uses and identify which costs the lender will actually finance.
Use the current SBA financing guide for rule scope and the October 2026 SOP reference. Then ask the lender to identify the permitted equity denominator, eligible sources and proof needed for your transaction.
| Illustrative project use | USD |
|---|---|
| Purchase price | $900,000 |
| Cash-funded closing costs | $30,000 |
| Immediate equipment work | $40,000 |
| Opening working cash | $30,000 |
| Total uses | $1,000,000 |
| Proposed senior loan | $800,000 |
| Proposed seller note | $50,000 |
| Buyer cash needed to balance sources | $150,000 |
The balanced example is not an approval
The table only reconciles arithmetic. It does not establish that the seller note is permitted, that $800,000 is supported by value or cash flow, or that any particular use is eligible. If the seller note is rejected and nothing else changes, buyer cash rises by $50,000. If immediate equipment work is already included in the purchase price or financed elsewhere, the budget must be adjusted to avoid counting it twice.
Create separate columns for cash already spent, cash still required and the source documentation. An expense can be real without counting as qualifying equity under a lender’s rules. Keep paid invoices, bank records and any gift or loan documentation organized.
Trace every proposed source
Identify whether a contribution is unborrowed cash, a personal loan, a gift, seller debt or another investor’s contribution. Disclose repayment obligations and distribution preferences. A source’s name does not establish its eligibility; the lender needs to understand its actual terms.
Do not move funds through unnecessary accounts merely to simplify the story. Preserve the transfer trail. Never submit edited statements or relabel borrowed funds as savings. If the source is not settled, record it as unresolved rather than counting it as available.
Stress the remaining cash after closing
A buyer can meet the closing contribution and still be undercapitalized for operations. Separate operating liquidity from planned capital work and personal reserves. Review cash needs around payroll, utilities, chemical purchases, membership refunds and equipment downtime.
Model the funded project in the cash-flow calculator. Ask whether the remaining cash is adequate under a weaker revenue month and whether proposed seller payments leave enough capacity. The appropriate buffer depends on the operation and lender, not a universal website percentage.
Sources and scope
Public guidance reviewed October 17, 2026. Rules and individual transaction facts can change; a source does not establish a particular property’s compliance, financing approval or value.