{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/does-a-seller-s-post-closing-consulting-agreement-influence-their-standby-note-status-with","api_url":"https://dealroom.so/api/public/questions/does-a-seller-s-post-closing-consulting-agreement-influence-their-standby-note-status-with","question":"Does a seller's post-closing consulting agreement influence their standby note status with the SBA?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, any payments to the seller post-closing, including consulting fees, must be carefully structured to ensure they do not circumvent standby note requirements.","rule":"If a seller has a note on full standby, any other payments to them (e.g., consulting fees, lease payments for seller-owned property, salary) must be for bona fide, reasonable services or expenses. Payments that are disguised forms of debt repayment or that are excessive for the services rendered can violate the standby agreement and jeopardize the SBA guaranty.","example":"A seller provides a $50,000 standby note and also signs a 6-month consulting agreement for $5,000 per month. The consulting fees must be for actual, documented services and at fair market value. If the fees are deemed excessive or a way to circumvent the standby, it could be problematic for the SBA loan.","what_lenders_check":"Lenders are vigilant about preventing any circumvention of the standby agreement. They scrutinize all post-closing payments to the seller to ensure they are legitimate business expenses and not disguised repayments of the subordinated debt, which would put the SBA loan at risk.","required_facts":[],"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/does-a-seller-s-post-closing-consulting-agreement-influence-their-standby-note-status-with","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."]}