Cash you can put in (equity)
What it means
This is the money you have as a down payment.
Most lenders require a down payment as a test of how committed you are to this business. Some government funding programs can reduce, or even eliminate, this requirement, depending on how much you're asking for and your industry.
Why lenders want you to have money in the deal
Equity is often called "skin in the game". When you've put your own savings into the business, you have a strong reason to see it through, and the lender isn't carrying all of the risk. It's one of the classic "5 Cs of credit" lenders weigh, usually listed as capital.
Equity also protects the lender if things go badly. If the business has to sell what it bought with the loan, the sale only has to cover the borrowed portion, not the full price.
What usually counts, and what doesn't
Cash from your own savings is the clearest form of equity. Depending on the lender, money you've already spent on the business, equipment you contribute, or a gift that doesn't have to be repaid may also count. A loan from family or a personal line of credit usually doesn't, because it's still debt.
How much equity a lender expects varies with the lender, the size of the loan, what it's for, and your industry. Asking two or three lenders, or your local small business support office, is the fastest way to learn what applies to you.
Good to know
Money you borrow to make your down payment usually doesn't count as your own, so check with your lender. To find out which programs might lower your requirement, ask a lender or your local small business support office.