{"ok":true,"canonical_url":"https://dealroom.so/glossary/subordination-agreement","api_url":"https://dealroom.so/api/public/glossary/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":"subordination-agreement","term":"Subordination agreement","group":"Doing the deal","definition":"This is a legal document where one creditor agrees to take a lower priority position than another in the event of default. For an SBA loan, the seller note almost always needs to be subordinated.","what_it_means":"If the seller is providing financing (a seller note), the SBA lender will require a full standby agreement. This means the seller cannot receive principal or interest payments until the SBA loan is fully repaid, or a partial standby, which has specific conditions. This ensures the SBA loan has repayment priority.","url":"https://dealroom.so/glossary/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":"full-standby-agreement","term":"Full Standby Agreement","url":"https://dealroom.so/glossary/full-standby-agreement"},{"slug":"partial-standby-agreement","term":"Partial Standby Agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"},{"slug":"standby","term":"Standby","url":"https://dealroom.so/glossary/standby"}],"related_questions":[{"question":"When is a lender required to obtain a subordination agreement for existing business debt?","url":"https://dealroom.so/for-lenders/questions/when-is-a-lender-required-to-obtain-a-subordination-agreement-for-existing-business-debt"},{"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":"When is a lender required to obtain a subordination agreement for existing business debt that is not being refinanced by a 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/when-is-a-lender-required-to-obtain-a-subordination-agreement-for-existing-business-debt-t"},{"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"}]},"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 — Subordination agreement","url":"https://dealroom.so/glossary/subordination-agreement","source_type":"DealRoom Data"}}