{"ok":true,"canonical_url":"https://dealroom.so/glossary/subordinate","api_url":"https://dealroom.so/api/public/glossary/subordinate","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":"subordinate","term":"Subordinate","group":"Doing the deal","definition":"To subordinate means to rank a debt or claim below another in terms of payment priority. The subordinated party agrees to be paid after others.","what_it_means":"A seller note is often subordinated to the SBA loan, meaning the bank gets paid first if the business defaults. Your equity injection funds might also be required to be free of any liens or subordination agreements that would give another party priority over the SBA. Understand how all debt ranks.","url":"https://dealroom.so/glossary/subordinate","official_sources":[{"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"},{"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"}],"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":"subordinated-debt","term":"Subordinated Debt","url":"https://dealroom.so/glossary/subordinated-debt"},{"slug":"lien-position","term":"Lien position","url":"https://dealroom.so/glossary/lien-position"}],"related_questions":[{"question":"Can a seller note be subordinate to the SBA loan but still receive principal payments?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-be-subordinate-to-the-sba-loan-but-still-receive-principal-payments"},{"question":"What happens if a seller note on standby is subordinate to another non-SBA debt?","url":"https://dealroom.so/sba-7a/questions/what-happens-if-a-seller-note-on-standby-is-subordinate-to-another-non-sba-debt"},{"question":"How long must a seller note be subordinate to the SBA loan for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-long-must-a-seller-note-be-subordinate-to-the-sba-loan-for-a-business-acquisition"},{"question":"What if the seller wants to retain a subordinate lien on some business assets after the sale?","url":"https://dealroom.so/sba-7a/questions/what-if-the-seller-wants-to-retain-a-subordinate-lien-on-some-business-assets-after-the-sa"},{"question":"If a seller takes a fully subordinated note, can they remain an employee or consultant after acquisition?","url":"https://dealroom.so/sba-7a/questions/if-a-seller-takes-a-fully-subordinated-note-can-they-remain-an-employee-or-consultant-afte"},{"question":"Can the seller receive interest payments on a fully subordinated seller note during the SBA loan term?","url":"https://dealroom.so/sba-7a/questions/can-the-seller-receive-interest-payments-on-a-fully-subordinated-seller-note-during-the-sb"}]},"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 — Subordinate","url":"https://dealroom.so/glossary/subordinate","source_type":"DealRoom Data"}}