Tap to get financing
SBA 7(a) Loans
SBA 7(a) Loans
Uses for the SBA 7(a) LoanCompare SBA LoansFund a StartupBuy EquipmentGet a Commercial MortgageRepair CapitalRefinance Business DebtGet a Working Capital LoanBuy a BusinessLearn About the SBA Lending ProcessFind an SBA Lender
Requirements Rates Loan Calculator
SBA Tools
SBA 7(a) Loan CalculatorSBA 504 Loan Calculator
Blog
About Us
About usContact us
Get financing
Close sba7a.loans is an independently owned and operated website and has no government affiliation. We are not the Small Business Administration and are not a lender. If you are trying to reach the SBA click here to be redirected.
Newly Published
Oct 27 at SBA 7(a) Loans
Small Business Loans Guide: Before You Start
Aug 26 at SBA 7(a) Loans
Who Are Specialized Lenders in the SBA 7(a) Loan Program?
Aug 26 at SBA 7(a) Loans
Writing a Proposal for the SBA 7(a) Loan
Explore the Janover Network
Mar 31 at Commercial Real Estate Loans
7 Reasons Multifamily Should Be in Your CRE Portfolio
Mar 29 at Commercial Real Estate Loans
The Advantages and Risks of Buying Distressed Properties
Mar 28 at Multifamily Loans
Why Smaller, "Boutique" Apartment Buildings Can Be Great Investments
Was This Article Helpful?
Small Business and SBA Lending Blog
Last updated on Feb 19, 2023
2 min read

Can You Use a Gift as a Down Payment on an SBA 7(a) Loan?

Fortunately for SBA loan borrowers, there’s nothing preventing you from using a gift as a down payment on an SBA 7(a) loan . In most cases, however, the gift must be a from a family member. Otherwise, the lender may be concerned that the gift is actually a loan in disguise— and, that it might h

Apply for a loan in minutes and get multiple quotes today → Get Quotes

In this article:
  1. How Much of a Down Payment do I Need?
  2. Other Methods to Acquire the Funds for an SBA 7(a) Loan Down Payment
  3. Related Questions
  4. Get Financing

Fortunately for SBA loan borrowers, there’s nothing preventing you from using a gift as a down payment on an SBA 7(a) loan. In most cases, however, the gift must be a from a family member. Otherwise, the lender may be concerned that the gift is actually a loan in disguise— and, that it might have undisclosed terms that could actually hinder a borrower’s repayment of their SBA 7(a) loan.

How Much of a Down Payment do I Need?

Depending on your creditworthiness, the size of your SBA loan, and your lender’s individual preferences, you’ll probably need to put down anywhere between 10% and 30% of the entire loan amount. However, if you want to buy an existing business, the SBA’s new policy permits you to do so with as little as 10% down, 5% of which can come from a seller note. To get that much financing, though, you’ll need to have both a lender and a seller who are on board with your goals.

Other Methods to Acquire the Funds for an SBA 7(a) Loan Down Payment

While getting a gift from a family member is a fantastic way to fund the down payment for your SBA 7(a) loan, its far from the only way to get the money you need. Other options include:

  • Using tax-deferred retirement funds in a 401(k) or IRA through the Rollovers as Business Start-Ups (ROBS) program

  • Getting a cash-out refinance or home equity line of credit (HELOC) on your home, or even a cash-out refinance or line of credit on a commercial property that you own

  • Taking out a personal loan (though this can be much riskier due to higher interest rates)

It’s important to keep in mind that if a borrower does decide to use a loan to finance their SBA down payment, they need to be able to prove that they can pay it back with income not derived from the business they are getting the SBA loan for. For example, if a borrower were to take out a personal loan to fund their SBA loan downpayment, and they had a full time job (or their spouse had a full time job) separate from their business, this would be an acceptable source of income.

Related Questions

What are the requirements for using a gift as a down payment on an SBA 7(a) loan?

You can use a gift from a family member as a down payment on an SBA 7(a) loan. The amount of the down payment will depend on your creditworthiness, the size of the loan, and your lender's individual preferences. Generally, you will need to put down between 10% and 30% of the entire loan amount. If you are buying an existing business, the SBA's new policy permits you to do so with as little as 10% down, 5% of which can come from a seller note.

In addition to a gift from a family member, there are other methods to acquire the funds for an SBA 7(a) loan down payment. These include using tax-deferred retirement funds in a 401(k) or IRA through the Rollovers as Business Start-Ups (ROBS) program, getting a cash-out refinance or home equity line of credit (HELOC) on your home, or even a cash-out refinance or line of credit on a commercial property that you own, and taking out a personal loan.

If a borrower does decide to use a loan to finance their SBA down payment, they need to be able to prove that they can pay it back with income not derived from the business they are getting the SBA loan for. For example, if a borrower were to take out a personal loan to fund their SBA loan downpayment, and they had a full time job (or their spouse had a full time job) separate from their business, this would be an acceptable source of income.

What types of gifts are accepted as a down payment for an SBA 7(a) loan?

The SBA 7(a) program accepts gifts from family members as your down payment. Income from a spouse’s job is another permitted source.

Are there any restrictions on the amount of a gift that can be used as a down payment for an SBA 7(a) loan?

Yes, there are restrictions on the amount of a gift that can be used as a down payment for an SBA 7(a) loan. According to the SBA's Standard Operating Procedure (SOP) 50 10 5 Subpart B, the maximum amount of a gift that can be used as a down payment is $5,000. Additionally, the gift must be from a relative or close friend, and the borrower must provide a gift letter that includes the donor's name, address, and phone number, the amount of the gift, and the donor's relationship to the borrower.

Are there any other requirements for using a gift as a down payment on an SBA 7(a) loan?

Yes, there are other requirements for using a gift as a down payment on an SBA 7(a) loan. The gift must be from a family member, and the borrower must be able to prove that they can pay it back with income not derived from the business they are getting the SBA loan for. For example, if a borrower were to take out a personal loan to fund their SBA loan downpayment, and they had a full time job (or their spouse had a full time job) separate from their business, this would be an acceptable source of income.

Additionally, depending on the borrower's creditworthiness, the size of the SBA loan, and the lender's individual preferences, the borrower may need to put down anywhere between 10% and 30% of the entire loan amount. However, if the borrower is buying an existing business, the SBA's new policy permits them to do so with as little as 10% down, 5% of which can come from a seller note. To get that much financing, though, the borrower will need to have both a lender and a seller who are on board with their goals.

What are the benefits of using a gift as a down payment on an SBA 7(a) loan?

Using a gift from a family member as a down payment for an SBA 7(a) loan is a great way to fund the loan. Benefits of using a gift include:

  • No need to pay back the gift
  • No interest payments
  • No need to use personal assets

In addition to gifts from family members, other sources of funds for an SBA 7(a) loan down payment include:

  • Using tax-deferred retirement funds in a 401(k) or IRA through the Rollovers as Business Start-Ups (ROBS) program
  • Getting a cash-out refinance or home equity line of credit (HELOC) on your home, or even a cash-out refinance or line of credit on a commercial property that you own
  • Taking out a personal loan (though this can be much riskier due to higher interest rates)

It’s important to keep in mind that if a borrower does decide to use a loan to finance their SBA down payment, they need to be able to prove that they can pay it back with income not derived from the business they are getting the SBA loan for. For example, if a borrower were to take out a personal loan to fund their SBA loan downpayment, and they had a full time job (or their spouse had a full time job) separate from their business, this would be an acceptable source of income.

In this article:
  1. How Much of a Down Payment do I Need?
  2. Other Methods to Acquire the Funds for an SBA 7(a) Loan Down Payment
  3. Related questions
  4. Get Financing
Tags
  • SBA 7(a) Loans
  • SBA Loans
  • SBA 7(a)
  • SBA Business Loans
  • Small Business Administration
  • SBA Loan Down Payments
  • SBA 7(a) Down Payments
  • Rollovers As Business Start-Ups

Getting a small business loan should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

SBA 7(a) Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487

hello@sba7a.loans

SBA 7(a) Loans

SBA Loan Comparison
SBA 7(a) Loan Fees, Rates, and Terms
Qualifying for an SBA 7(a) Loan
SBA Loan Guides per State

Site Information

Privacy Policy
Terms of Use
Advertiser Disclosure

This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We are a technology company that uses software and experience to bring lenders and borrowers together.

All users should perform their own due diligence and research. Nothing on this website is an offer or a solicitation for a loan. This website does not endorse or charge you for any service or product. None of the information on this site constitutes legal advice. We are not affiliated with the Small Business Administration (SBA). If you need to visit the SBA directly please click here: sba.gov

Click here for our Advertiser Disclosure.

Copyright © 2023 Janover Inc. All rights reserved.