1st time searchers raising equity.

Down Payment Truly in Compliance? One topic I’m seeing more and more searchers struggle with is the grey zone around raising equity for the acquisition down payment, especially when that equity is coming from outside investors. We all know the official guidelines: • Reg D 506(c) if you’re publicly soliciting • Verification of accredited investors • PPM (Private Placement Memorandum) to outline risks & terms • Subscription docs • Proper entity structuring for GP/LP relationships Here’s where things get murky: When raising equity for your SBA down payment… does it really need to follow securities compliance to the letter? Some lenders take a strict stance and want proof the capital raise followed Reg D rules. Others only care that the equity isn’t debt in disguise. Still others seem to look the other way as long as the deal cash-flows and the guarantor looks strong. • Searchers raising equity “informally” from friends & business contacts • Investors who think they’re contributing capital but are actually entering a security • SBA lenders who each interpret “acceptable equity injection” differently • CPAs and attorneys who often disagree on what’s required vs. what’s customary There’s a big difference between what’s compliant, what’s common, and what lenders accept. And for first-time acquirers, that gap can be confusing and risky. I’d love to open this up to the community: • How strict were your lenders about documenting your equity raise? • Did you file a 506(c) (or 506(b)) offering for your down payment? • Did your investors require a full PPM, or was a simple subscription agreement enough? • Should SBA searchers treat raising the down payment as a formal securities offering, or is that overkill? This is a critical step in putting together a clean, financeable deals, yet it’s one of the least talked-about topics in the ecosystem. Happy to compare notes with anyone navigating this right now.