{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-on-partial-standby-count-towards-the-required-equity-injection","api_url":"https://dealroom.so/api/public/questions/can-a-seller-note-on-partial-standby-count-towards-the-required-equity-injection","question":"Can a seller note on partial standby count towards the required equity injection?","topic":"Seller Notes & Standby","audience":"borrower","bot_mode":"buyer","short_answer":"No, a seller note on partial standby cannot count towards the required equity injection for an SBA 7(a) loan.","rule":"For a seller note to be considered part of the equity injection, it must be on 'full standby,' meaning no payments of principal or interest are allowed for the entire term of the SBA loan. A partial standby, which permits some payments, does not meet the SBA's definition of true equity and would not be accepted.","example":"If you negotiate a $50,000 seller note that allows interest-only payments to the seller during the first two years, this would be considered a partial standby. As such, it would not be eligible to be counted as part of your required equity injection for the SBA 7(a) loan.","what_lenders_check":"Lenders will reject any seller note intended for equity injection if it includes partial standby terms, as it violates SBA policy. They must ensure that all funds counted as equity injection are truly subordinated to the SBA loan.","required_facts":["Partial standby","Full standby required","Equity injection","Seller note terms","SBA policy"],"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":"Can a seller note on full standby still be secured by business assets?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-on-full-standby-still-be-secured-by-business-assets"},{"question":"What are the requirements if the seller wants to stay involved in the business post-acquisition?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-if-the-seller-wants-to-stay-involved-in-the-business-post-acquis"},{"question":"What are the specific terms for the duration of a seller note on full standby?","url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-terms-for-the-duration-of-a-seller-note-on-full-standby"},{"question":"If a seller note is on full standby, when can the seller start receiving principal payments?","url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-full-standby-when-can-the-seller-start-receiving-principal-payments"},{"question":"Can a seller note on full standby accrue interest during the standby period, even if not paid?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-on-full-standby-accrue-interest-during-the-standby-period-even-if-not-pa"},{"question":"Is there a maximum percentage of the equity injection that can come from a seller note on standby?","url":"https://dealroom.so/sba-7a/questions/is-there-a-maximum-percentage-of-the-equity-injection-that-can-come-from-a-seller-note-on-"}],"related_terms":[{"term":"Partial Standby Seller Note","url":"https://dealroom.so/glossary/partial-standby-seller-note"},{"term":"Seller note on standby","url":"https://dealroom.so/glossary/seller-note-on-standby"},{"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":"Standby Note","url":"https://dealroom.so/glossary/standby-note"},{"term":"Seller note","url":"https://dealroom.so/glossary/seller-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-on-partial-standby-count-towards-the-required-equity-injection","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."]}