{"ok":true,"canonical_url":"https://dealroom.so/glossary/disguised-seller-financing","api_url":"https://dealroom.so/api/public/glossary/disguised-seller-financing","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"disguised-seller-financing","term":"Disguised Seller Financing","group":"Your money in the deal","definition":"This occurs when seller financing is structured to appear as equity, a gift, or another form of capital to circumvent SBA's standby requirements for seller notes. The SBA rigorously scrutinizes transactions for this.","what_it_means":"The SBA requires seller notes to be on full standby, meaning no payments can be made until the SBA loan is repaid. Sellers sometimes try to structure payments or 'consulting fees' to bypass this. Your lender will identify and reclassify any disguised seller financing, potentially jeopardizing your deal if not disclosed upfront. Be transparent.","url":"https://dealroom.so/glossary/disguised-seller-financing","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"},{"slug":"13-cfr-part-120","title":"13 CFR Part 120 — Business Loans","official_url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120","official_label":"View on eCFR","authority_tier":1,"publisher":"Office of the Federal Register","source_guide_url":"https://dealroom.so/sba-7a/sources/13-cfr-part-120"}],"related":[{"slug":"seller-note","term":"Seller note","url":"https://dealroom.so/glossary/seller-note"},{"slug":"standby","term":"Standby","url":"https://dealroom.so/glossary/standby"},{"slug":"full-standby-agreement","term":"Full Standby Agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"subordinated-debt","term":"Subordinated Debt","url":"https://dealroom.so/glossary/subordinated-debt"}],"related_questions":[{"question":"Does the SBA 7(a) loan program allow for seller training period financing?","url":"https://dealroom.so/sba-loans/basics/does-the-sba-7-a-loan-program-allow-for-seller-training-period-financing"},{"question":"How does seller financing structure impact the required equity injection for a business acquisition?","url":"https://dealroom.so/for-lenders/questions/how-does-seller-financing-structure-impact-the-required-equity-injection-for-a-business-ac"},{"question":"What specific due diligence is required for seller financing in a change of ownership?","url":"https://dealroom.so/for-lenders/questions/what-specific-due-diligence-is-required-for-seller-financing-in-a-change-of-ownership"},{"question":"What specific due diligence is needed for seller financing that is not on full standby?","url":"https://dealroom.so/for-lenders/questions/what-specific-due-diligence-is-needed-for-seller-financing-that-is-not-on-full-standby"},{"question":"How much of my equity injection must be cash, rather than other assets or seller financing?","url":"https://dealroom.so/sba-7a/questions/how-much-of-my-equity-injection-must-be-cash-rather-than-other-assets-or-seller-financing"},{"question":"Does the SBA 7(a) loan program allow for seller training period financing for the buyer?","url":"https://dealroom.so/sba-7a/questions/does-the-sba-7-a-loan-program-allow-for-seller-training-period-financing-for-the-buyer"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Disguised Seller Financing","url":"https://dealroom.so/glossary/disguised-seller-financing","source_type":"DealRoom Data"}}