Non-SBA Financing Buyer Equity Requirements - Creative Options

searcher profile

February 26, 2026

by a searcher from Columbia University in New York, NY, USA

When pursuing a non-SBA route and mostly private lending, how have searchers and buyers been able to reduce the typical % new equity requirement? What creative structure elements have you used and by how much you were able to reduce your equity contribution (final %)?
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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I think the question is more about where the equity is going to come from. With more conventional banking and non-bank lenders, they typically have a much lower loan-to-cost than you can achieve with SBA financing. However, the funds do not need to be the borrowers funds most of the time. You can bring capital to the table from the following: 1) Direct Sponsor / Buyer Equity 2) Investor Equity 3) Seller Roll-Over Equity 4) Seller Debt 5) Sometimes mezzanine Debt 6) Earn-Outs Most of the time we find most lenders want to see between 10% and 20% fresh equity at a minimum in each deal, even if there is a large seller note or large roll-over equity. Also keep in mind if you use a seller note or mezzanine debt, the debt service coverage ratios still need to meet the minimum the lender requires with all of the debt service factored in. Some lenders will count earn-outs as a reduction in cost and others will not. I hope this helps. If you ever want to discuss different financing options and deal structuring, you can reach me here or directly at redacted
commentor profile
Reply by a lender
from Clemson University in Reston, VA, USA
There a lot of ways to do this, it's no a simple answer but happy to discuss. redacted lets chat.
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