{"ok":true,"canonical_url":"https://dealroom.so/glossary/standby-requirement","api_url":"https://dealroom.so/api/public/glossary/standby-requirement","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":"standby-requirement","term":"Standby Requirement","group":"Your money in the deal","definition":"A condition where a seller note or other debt owed to the seller is subordinated to the SBA loan, meaning the seller cannot receive payments until the SBA loan is repaid.","what_it_means":"If a seller note is part of your equity injection, the SBA will likely require it to be on \"full standby.\" This means the seller cannot be paid principal or interest until the SBA loan is fully satisfied. This strengthens the lender's position and demonstrates your commitment to the business.","url":"https://dealroom.so/glossary/standby-requirement","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":"What are the specific requirements for a seller note to qualify as full standby equity?","url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-requirements-for-a-seller-note-to-qualify-as-full-standby-equity"},{"question":"Is \"insurable interest\" always a legal requirement for obtaining business life insurance?","url":"https://dealroom.so/sba-7a/questions/is-insurable-interest-always-a-legal-requirement-for-obtaining-business-life-insurance"},{"question":"Is profitability a strict requirement for getting an SBA 7(a) loan?","url":"https://dealroom.so/sba-loans/basics/is-profitability-a-strict-requirement-for-getting-an-sba-7-a-loan"},{"question":"Is a blanket lien on all business assets a standard SBA requirement?","url":"https://dealroom.so/sba-7a/questions/is-a-blanket-lien-on-all-business-assets-a-standard-sba-requirement"},{"question":"What are the specific standby requirements for a seller note to count towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-standby-requirements-for-a-seller-note-to-count-towards-my-equity-in"},{"question":"What are the specific SBA requirements for a seller's note to be on full standby?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-sba-requirements-for-a-seller-s-note-to-be-on-full-standby"}]},"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 — Standby Requirement","url":"https://dealroom.so/glossary/standby-requirement","source_type":"DealRoom Data"}}