Equity injection

(a) Small Business Act Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended by adding at the end the following: (38) Equity injection requirements (A) Equity injection defined In this paragraph, the term equity injection means an investment by a borrower in the applicable small business concern, in the form and amount determined appropriate by the Administrator. (B) Equity injection requirements for veterans (i) In general For a startup or change of ownership loan with a deferred participation share of the total amount that is not more than $1,000,000 to a veteran or spouse of a veteran, the minimum equity injection percentage required under Standard Operating Procedure 50 10, version 8, effective on June 1, 2025, or any successor guidance, shall be reduced by not less than 5 percentage points. (ii) Required percentage If the guidance described in clause (i) does not list an exact percentage, the Administrator shall include a requirement to reduce the percentage, as calculated under the method used in the guidance, for veterans or spouses of veterans in accordance with clause (i). (C) Equity injection requirements generally The Administrator shall encourage lenders to lower equity injection requirements for loans to veterans or spouses of veterans with a deferred participation share of the total amount that is not more than $1,000,000.. (b) Small Business Investment Act of 1958 Section 502(3)(C) of the Small Business Investment Act of 1958 (15 U.S.C. 696(3)(C)) is amended— (A) by redesignating clauses (i) through (iv) as subclauses (I) through (IV), respectively, and adjusting the margins accordingly; (B) by inserting before subclause (I), as so redesignated, the following: (i) for a small business concern that is not owned by a veteran or spouse of a veteran—; (C) in subclause (III), as so redesignated, by striking clauses (i) and (ii) and inserting subclauses (I) and (II); and (D) by adding at the end the following: (ii) for a loan to a small business concern owned by a veteran or spouse of a veteran— (I) at least 5 percent of the total cost of the project financed, if the small business concern has been in operation for a period of 2 years or less; or (II) at least 5 percent of the total cost of the project financed, in all other circumstances, at the discretion of the development company..