{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-count-towards-the-buyer-s-10-equity-injection-for-an-sba-7-a-loan","api_url":"https://dealroom.so/api/public/questions/can-a-seller-note-count-towards-the-buyer-s-10-equity-injection-for-an-sba-7-a-loan","question":"Can a seller note count towards the buyer's 10% equity injection for an SBA 7(a) loan?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, a seller note can count towards the buyer's equity injection, but it must be on full standby for the life of the SBA loan and cannot be repaid until the SBA loan is paid in full.","rule":"For a seller note to count towards the minimum equity injection, it must be on 'full standby'. This means no payments of principal or interest can be made on the seller note while the SBA loan is outstanding. The seller note must be unconditionally subordinated to the SBA loan.","example":"If a $1,000,000 acquisition requires $100,000 equity, and the buyer provides $50,000 cash, a $50,000 seller note on full standby can satisfy the remaining equity requirement.","what_lenders_check":"Lenders verify the seller note's terms through a subordination agreement to ensure it meets the full standby requirements. They ensure the seller understands and agrees to these strict terms.","required_facts":["Seller note","Full standby","Equity injection","No principal payments","No interest payments","Unconditionally subordinated"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","13 CFR Part 120 - Business Loans","7(a) Loan Program Terms, Conditions, and Eligibility"],"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"},{"title":"7(a) Loan Program Terms, Conditions, and Eligibility","url":"https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility"}],"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":"Buyer Equity","url":"https://dealroom.so/glossary/buyer-equity"},{"term":"Seller's equity","url":"https://dealroom.so/glossary/seller-s-equity"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Seller note","url":"https://dealroom.so/glossary/seller-note"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-count-towards-the-buyer-s-10-equity-injection-for-an-sba-7-a-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."]}