{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-accrue-interest-during-the-full-standby-period-for-an-sba-loan","api_url":"https://dealroom.so/api/public/questions/can-a-seller-note-accrue-interest-during-the-full-standby-period-for-an-sba-loan","question":"Can a seller note accrue interest during the full standby period for an SBA loan?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, a seller note on full standby for an SBA 7(a) loan can accrue interest during the standby period. However, this accrued interest cannot be paid until the SBA loan is fully repaid.","rule":"SBA policy allows seller notes on full standby to be interest-bearing, but both principal and interest payments must be deferred until the SBA loan is paid in full. This ensures that the seller's claim does not interfere with the borrower's ability to repay the SBA loan.","example":"If a seller provides a $100,000 note at 5% interest on full standby for a 10-year SBA loan, the interest will accrue annually. However, no principal or interest payments can be made to the seller until after the 10-year SBA loan is fully satisfied.","what_lenders_check":"Lenders verify that the standby agreement explicitly states that no principal or interest payments are allowed until the SBA loan is fully satisfied. They are concerned about any arrangement that could divert cash flow from the business to the seller before the SBA loan is repaid.","required_facts":["Full standby","Accrued interest","Payment deferral","SBA loan repayment","Seller note terms"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"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":"For a $900,000 business acquisition, what percentage of the total required equity injection can come from a fully subordinated seller note?","url":"https://dealroom.so/sba-7a/questions/for-a-900-000-business-acquisition-what-percentage-of-the-total-required-equity-injection-"},{"question":"Can a seller who takes a fully subordinated note also remain an employee or consultant of the business after the acquisition?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-who-takes-a-fully-subordinated-note-also-remain-an-employee-or-consultant-of-"},{"question":"How does an earn-out provision affect an SBA 7(a) loan for a business acquisition?","url":"https://dealroom.so/sba-7a/questions/how-does-an-earn-out-provision-affect-an-sba-7-a-loan-for-a-business-acquisition"},{"question":"What is the minimum term duration a seller note must be on full standby for an SBA loan?","url":"https://dealroom.so/sba-7a/questions/what-is-the-minimum-term-duration-a-seller-note-must-be-on-full-standby-for-an-sba-loan"},{"question":"Can interest be accrued and paid on a seller note while it is on full standby?","url":"https://dealroom.so/sba-7a/questions/can-interest-be-accrued-and-paid-on-a-seller-note-while-it-is-on-full-standby"}],"related_terms":[{"term":"Seller standby note","url":"https://dealroom.so/glossary/seller-standby-note"},{"term":"Standby seller note","url":"https://dealroom.so/glossary/standby-seller-note"},{"term":"Accrue Interest","url":"https://dealroom.so/glossary/accrue-interest"},{"term":"Seller note on standby","url":"https://dealroom.so/glossary/seller-note-on-standby"},{"term":"Partial Standby Seller Note","url":"https://dealroom.so/glossary/partial-standby-seller-note"},{"term":"Standby Note","url":"https://dealroom.so/glossary/standby-note"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-accrue-interest-during-the-full-standby-period-for-an-sba-loan","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}