SBA rules · SOP 50 10 8.1
Can a gift be used for an SBA loan down payment?
Yes, gift funds may be used to satisfy an equity injection requirement, but a gift letter alone is insufficient and must be verified with full banking and transfer records.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Eligible source: Cash that is not borrowed from other sources, including gifts, is an eligible source of equity injection.
- Gift letters: A promissory note, "gift letter," or financial statement is not sufficient evidence of cash injection without complete corroborating documentation.
- Required verification documents: Verifying cash injection requires a copy of a processed check or wire transfer showing funds moved into the borrower's account or escrow, the most recent account statement (covering at least 30 days) showing that funds were available in the source account, and a borrower bank statement confirming deposit or a settlement statement/HUD-1 showing the use of cash.
- Timing and file retention: With the exception of SBA Express and Export Express loans, lenders must verify the required equity injection prior to disbursing any loan proceeds and maintain evidence of the verification in the loan file.
- Express loan exception: For SBA Express and Export Express loans, lenders are only required to verify the equity injection if they do so as part of their standard processes for similarly-sized, non-SBA guaranteed commercial loans.
The source
What the SOP says
“Cash that is not borrowed, whether on the business’s balance sheet or from other sources (e.g. gift).
“A promissory note, “gift letter,” or financial statement is not sufficient evidence of cash injection without corroborating evidence consistent with Subparagraph f. i. immediately above.
“A copy of a check or wire transfer along with evidence that the check or wire was processed showing the funds were moved into the Borrower’s account or escrow;
“A copy of the most recent statement(s) (covering at least 30 days) from the account where the funds are being withdrawn (showing that funds were available); and
“A statement from the Borrower’s account documenting the funds were deposited or a copy of a settlement statement or HUD-1 showing the use of the cash.
“With the exception of SBA Express and Export Express loans, Lenders must verify the SBA-required equity injection prior to disbursing any loan proceeds and must maintain evidence of such verification in their loan files.
“For SBA Express and Export Express loans, if a Lender requires an equity injection and, as part of its standard processes for similarly-sized, non-SBA guaranteed commercial loans verifies the equity injection, it must do so for its SBA Express and Export Express loans.
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.