# If SBA equity is waived, can the loan include working capital?

**Short answer:** Not dedicated permanent working capital. A lender that eliminates equity on a Business Expansion or Owner Buyout cannot include it in a 7(a) term loan within 90 days. Source: SOP 50 10 8.1, App. 15, Para. C.2.a.

Canonical page: https://www.sbaexpress.loans/answers/waived-equity-sba-working-capital-limit/
Last checked: 2026-11-08

Not dedicated permanent working capital. SOP 50 10 8.1, Appendix 15, Para. C.2.a, ties that limit to a waiver of the equity injection.

## When a waiver is possible

The lender may reduce or eliminate equity only on a Business Expansion or Owner Buyout. An Initial Acquisition cannot use this. Its minimum is 10%, which cannot be reduced or eliminated.

- The lender must determine the borrower has sufficient liquidity and working capital to sustain operations after the deal.
- The applicant's balance sheet must not show a negative net worth as of the last fiscal year-end.

## What a waiver costs you

Eliminating equity also bars dedicated permanent working capital in this or any other 7(a) term loan request within 90 days. SBA's reasoning is that a waiver assumes the business is adequately capitalized. Any working capital the deal needs must come from existing cash or a line of credit.

One small exception covers incidental post-approval adjustments. Excess proceeds remitted to the borrower cannot exceed $10,000 or one half of one percent of the loan amount, whichever is greater.

## Without a waiver

A change of ownership loan may include working capital and borrower out-of-pocket expenses (Para. A.3.b). If 50% or more of proceeds go to working capital, the lender must explain why in its credit memorandum (Para. C.2.b).

Whether to waive is the lender's decision. Lender policies vary.

## Sources

- [SOP 50 10 8.1, App. 15, Para. C.2.a (about pp. 374-375)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. A.3.b (about p. 369)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. C.2.b (about p. 381)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)