{"ok":true,"canonical_url":"https://dealroom.so/glossary/standby-terms","api_url":"https://dealroom.so/api/public/glossary/standby-terms","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-terms","term":"Standby Terms","aka":"Standby agreement","group":"Your money in the deal","definition":"These are conditions under which a seller note or other debt from an owner is subordinated to the SBA loan. This means the SBA lender gets paid first.","what_it_means":"If the seller is financing a portion of the deal, their loan to you might be subject to standby terms, meaning they can't be paid principal or interest until the SBA loan is repaid, or under specific conditions. This strengthens the SBA loan's position and reduces the risk for the lender. This is often an \"equity injection\" substitute.","url":"https://dealroom.so/glossary/standby-terms","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":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"subordinated-debt","term":"Subordinated Debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"full-standby-agreement","term":"Full Standby Agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}],"related_questions":[{"question":"What are the specific terms for the duration of a seller note on full standby?","url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-terms-for-the-duration-of-a-seller-note-on-full-standby"},{"question":"What specific terms must a seller note on full standby have to be acceptable for an SBA loan?","url":"https://dealroom.so/sba-7a/questions/what-specific-terms-must-a-seller-note-on-full-standby-have-to-be-acceptable-for-an-sba-lo"},{"question":"How does the SBA verify the terms of a seller note, including its standby status, for an acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-verify-the-terms-of-a-seller-note-including-its-standby-status-for-an-acq"},{"question":"Does a seller note always have to be on \"full standby\" or are other terms allowed for SBA purposes?","url":"https://dealroom.so/sba-7a/questions/does-a-seller-note-always-have-to-be-on-full-standby-or-are-other-terms-allowed-for-sba-pu"},{"question":"What specific terms are required for a seller note to be on *full* standby for a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-terms-are-required-for-a-seller-note-to-be-on-full-standby-for-a-7-a-loan"},{"question":"What happens to the SBA loan application if the seller refuses to agree to the standby terms for their note?","url":"https://dealroom.so/sba-7a/questions/what-happens-to-the-sba-loan-application-if-the-seller-refuses-to-agree-to-the-standby-ter"}]},"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 Terms","url":"https://dealroom.so/glossary/standby-terms","source_type":"DealRoom Data"}}