{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/does-a-full-standby-seller-note-prevent-the-seller-from-receiving-any-consulting-fees-from","api_url":"https://dealroom.so/api/public/questions/does-a-full-standby-seller-note-prevent-the-seller-from-receiving-any-consulting-fees-from","question":"Does a full standby seller note prevent the seller from receiving any consulting fees from the business post-acquisition?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"Generally, a full standby seller note does not automatically prevent the seller from receiving reasonable consulting fees, provided these fees are for actual services, are market rate, and do not create an affiliation or undue influence.","rule":"While a full standby seller note prohibits principal and interest payments, it doesn't necessarily bar all payments to the seller. Consulting agreements can be permissible if they are for legitimate, necessary services, are paid at arm's-length market rates, and are clearly documented. The SBA's primary concern is that the seller's ongoing role does not constitute continued control or an arrangement to circumvent the standby agreement, or that the consulting fees are excessive and impair the business's debt service ability.","example":"A seller provides a $100,000 full standby note for a $1,000,000 business. They can also be paid $2,000 per month for six months as a consultant to train the new owner, provided this fee is reasonable for the services and does not affect the business's ability to repay the SBA loan.","what_lenders_check":"Lenders will closely review any post-closing agreements with the seller, especially consulting contracts. They'll verify the legitimacy of the services, the reasonableness of the fees, and ensure that the arrangement doesn't undermine the standby agreement or the new owner's control of the business.","required_facts":["Seller note standby","Consulting agreement","Arm's-length terms","Market rate fees","Seller involvement"],"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":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/does-a-full-standby-seller-note-prevent-the-seller-from-receiving-any-consulting-fees-from","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."]}