{"ok":true,"canonical_url":"https://dealroom.so/sba-loans/basics/can-a-seller-note-count-towards-the-buyer-s-down-payment-for-an-sba-7-a-acquisition-loan","api_url":"https://dealroom.so/api/public/questions/can-a-seller-note-count-towards-the-buyer-s-down-payment-for-an-sba-7-a-acquisition-loan","question":"Can a seller note count towards the buyer's down payment for an SBA 7(a) acquisition loan?","topic":"Down payment & equity injection","audience":"new","bot_mode":"buyer","short_answer":"Yes, a seller note can count towards the buyer's equity injection (down payment) for an SBA 7(a) acquisition loan, but it must be on full standby for the entire term of the SBA loan.","rule":"For a seller note to count as equity, it must be on 'full standby,' meaning no principal or interest payments can be made on it until the SBA loan is fully repaid. This ensures that the business's cash flow is prioritized for the SBA loan.","example":"A buyer is acquiring a business for $1 million and needs a 10% equity injection ($100,000). The buyer contributes $50,000 in cash, and the seller provides a $50,000 note, which is placed on full standby for the 10-year term of the SBA loan. This structure fulfills the equity requirement.","what_lenders_check":"Lenders must ensure the standby agreement is properly documented and legally enforceable, explicitly stating that no payments will be made on the seller note until the SBA loan is satisfied, to protect the SBA's position.","required_facts":["Seller note","Equity injection","Full standby","Business acquisition","No payments"],"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":"Can I use retirement funds from a 401(k) as equity injection for a $750,000 business purchase?","url":"https://dealroom.so/sba-loans/basics/can-i-use-retirement-funds-from-a-401-k-as-equity-injection-for-a-750-000-business-purchas"},{"question":"Can funds from a home equity line of credit (HELOC) be used as my equity injection for a business acquisition?","url":"https://dealroom.so/sba-loans/basics/can-funds-from-a-home-equity-line-of-credit-heloc-be-used-as-my-equity-injection-for-a-bus"},{"question":"Is it possible to use a second mortgage on my personal residence as an equity injection for a $1.5 million business acquisition?","url":"https://dealroom.so/sba-loans/basics/is-it-possible-to-use-a-second-mortgage-on-my-personal-residence-as-an-equity-injection-fo"},{"question":"How much cash must I personally inject for an SBA 7(a) business acquisition?","url":"https://dealroom.so/sba-loans/basics/how-much-cash-must-i-personally-inject-for-an-sba-7-a-business-acquisition"},{"question":"What are the acceptable sources for my cash equity injection beyond personal savings?","url":"https://dealroom.so/sba-loans/basics/what-are-the-acceptable-sources-for-my-cash-equity-injection-beyond-personal-savings"},{"question":"What is the SBA's minimum required equity injection percentage for a business acquisition?","url":"https://dealroom.so/sba-loans/basics/what-is-the-sba-s-minimum-required-equity-injection-percentage-for-a-business-acquisition"}],"related_terms":[{"term":"Down payment","url":"https://dealroom.so/glossary/down-payment"},{"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":"Aggregate SBA 7(a) Loan Eligibility","url":"https://dealroom.so/glossary/aggregate-sba-7-a-loan-eligibility"},{"term":"Acceleration of the Note","url":"https://dealroom.so/glossary/acceleration-of-the-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-loans/basics/can-a-seller-note-count-towards-the-buyer-s-down-payment-for-an-sba-7-a-acquisition-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."]}