The Lender (for delegated loans) determines that the invested equity, any required equity contribution and the pro forma debt-to-worth are acceptable for the type of business, management experience and competition, and discusses equity in detail in the credit memorandum. A start-up (in operation for one year or less) contributes at least 10 percent of total project costs, counting all costs to become operational whatever the funding source (except lines of credit and 504 loans); change of ownership equity follows Appendix 15. Only these count as equity: debt on full standby for the life of the loan under SBA Form 155 or an equivalent with the note attached and lien rights subordinated; unborrowed cash, including gifts; personal loans repaid from sources other than the business; grants without repayment or clawback during the loan; non-cash assets at net book value, or above it only with an independent appraisal (not a business valuation); verified eligible prepaid expenses (not education, advisory or Agent fees); and equity investments with no agreement to repay or make recovery distributions before the guaranty is released. SBA Express leaves equity to the Lender's judgment, but it verifies injection where it does so on non-SBA loans.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.