{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/can-a-seller-s-post-closing-consulting-agreement-influence-the-standby-status-of-their-sel","api_url":"https://dealroom.so/api/public/questions/can-a-seller-s-post-closing-consulting-agreement-influence-the-standby-status-of-their-sel","question":"Can a seller's post-closing consulting agreement influence the standby status of their seller note?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, a seller's post-closing consulting agreement can influence the standby status of their seller note, as excessive compensation might be viewed as a disguised payment.","rule":"If a seller has a note on full standby, they cannot receive any payments. However, a separate bona fide consulting agreement for legitimate services at fair market value is permissible. Lenders scrutinize consulting fees to ensure they are not a way to indirectly pay down the standby note or extract cash from the business at the expense of the SBA loan. Excessive fees could be considered a form of repayment.","example":"A seller provides a $100,000 note on full standby. Simultaneously, the buyer signs a consulting agreement paying the seller $5,000 per month for 12 months. If the consulting services are minimal or the fee is significantly above market rate, the lender might view this as an attempt to circumvent the standby agreement.","what_lenders_check":"Lenders examine consulting agreements for commercial reasonableness and ensure the seller provides genuine services. They look for any terms that could imply a connection between the consulting payments and the standby note, which would violate SBA rules and jeopardize the loan.","required_facts":["Consulting agreement","Seller note standby","Excessive compensation","Disguised payment","Fair market value","Cash flow impact"],"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":"Post-Closing Consulting Agreement","url":"https://dealroom.so/glossary/post-closing-consulting-agreement"},{"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":"Seller Consulting Agreement","url":"https://dealroom.so/glossary/seller-consulting-agreement"},{"term":"Seller standby agreement","url":"https://dealroom.so/glossary/seller-standby-agreement"},{"term":"Seller note on standby","url":"https://dealroom.so/glossary/seller-note-on-standby"}],"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-s-post-closing-consulting-agreement-influence-the-standby-status-of-their-sel","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."]}