{"ok":true,"canonical_url":"https://dealroom.so/glossary/seller-note-subordination-agreement","api_url":"https://dealroom.so/api/public/glossary/seller-note-subordination-agreement","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":"seller-note-subordination-agreement","term":"Seller Note Subordination Agreement","aka":"Standby Agreement","group":"Doing the deal","definition":"A legally binding document where the seller agrees that their financing (seller note) will be paid back only after the SBA 7(a) loan is fully satisfied. This is a standard SBA requirement for seller financing.","what_it_means":"If a seller note is part of your deal, the SBA will require a Seller Note Subordination Agreement, also known as a Standby Agreement, making the seller's debt \"full standby.\" This means the seller cannot receive any payments on their note until the SBA loan is repaid, ensuring the SBA lender has first claim on the business's cash flow. It functions as part of your equity injection.","url":"https://dealroom.so/glossary/seller-note-subordination-agreement","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":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"}],"related_questions":[{"question":"What specific language is required in a seller note subordination agreement for SBA 7(a) loan approval?","url":"https://dealroom.so/sba-7a/questions/what-specific-language-is-required-in-a-seller-note-subordination-agreement-for-sba-7-a-lo"},{"question":"What specific language is required in a seller note's subordination agreement to ensure it counts as full standby equity?","url":"https://dealroom.so/for-lenders/questions/what-specific-language-is-required-in-a-seller-note-s-subordination-agreement-to-ensure-it"},{"question":"If I use a seller note as part of my equity, what are the specific subordination terms required?","url":"https://dealroom.so/sba-7a/questions/if-i-use-a-seller-note-as-part-of-my-equity-what-are-the-specific-subordination-terms-requ"},{"question":"What are the lien subordination requirements for a seller note on full standby in a 7(a) acquisition?","url":"https://dealroom.so/for-lenders/questions/what-are-the-lien-subordination-requirements-for-a-seller-note-on-full-standby-in-a-7-a-ac"},{"question":"What documentation is specifically required for a lender to demonstrate proper subordination of a seller note on full standby?","url":"https://dealroom.so/for-lenders/questions/what-documentation-is-specifically-required-for-a-lender-to-demonstrate-proper-subordinati"},{"question":"Can a seller's post-closing consulting agreement influence the standby status of their seller note?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-s-post-closing-consulting-agreement-influence-the-standby-status-of-their-sel"}]},"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 — Seller Note Subordination Agreement","url":"https://dealroom.so/glossary/seller-note-subordination-agreement","source_type":"DealRoom Data"}}