August 2019
Ask The Experts
SBA 504 Q&A: Borrower Equity in Equipment

Q: A borrower wants to use the equity in some equipment they have on hand for the equity on a real estate purchase involving a 504 loan.  Does the Small Business Administration (SBA) allow for any other type of asset to be used as equity other than cash or appreciated value in real estate held over 2 years and confirmed by a recent appraisal?

Ask the Florida First Capital SBA 504 Loan ExpertsA: This type of injection would not be allowable for a 504 loan.  The SBA does not allow equipment as an acceptable form of equity injection into any 504 project.  The injection has to be in the form of cash or available real estate equity in the project property.

The only exception would be in the case where the 504 project had mixed collateral, such as a real estate purchase plus equipment needed for operations.  If the borrower has already paid for the equipment that is part of the 504 project and the equipment HAS NOT been put into use, that prepaid expense could be used as equity, just like any prepaid professional fees that are included in the project.

If you have a question you’d like our SBA 504 loan experts to answer, email us at or call 850.681.3601 or toll-free at 800.504.LOAN.