{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-does-a-seller-note-on-partial-standby-affect-my-required-equity-injection-for-an-acqui","api_url":"https://dealroom.so/api/public/questions/how-does-a-seller-note-on-partial-standby-affect-my-required-equity-injection-for-an-acqui","question":"How does a seller note on *partial* standby affect my required equity injection for an acquisition?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"A seller note on partial standby generally does not count towards the buyer's required equity injection. Only seller notes on *full* standby can potentially be considered part of the equity.","rule":"SBA rules specify that for a seller note to count towards the equity injection, it must be on 'full standby' for the entire term of the SBA loan, or at least for the first two years, with no payments of principal or interest during that period. A partial standby note, which allows for some payments, does not meet this strict definition.","example":"If a buyer needs a $100,000 equity injection and the seller offers a $50,000 note with interest-only payments for the first year (partial standby), this $50,000 would not count towards the buyer's injection.","what_lenders_check":"Lenders carefully review seller note terms to ensure they comply with SBA standby requirements. Misclassifying a partial standby note as equity could jeopardize the SBA guaranty, so lenders are very strict on this.","required_facts":["Seller note terms","Standby period","Equity injection rules","Payment structure"],"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":"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":"Partial Acquisition","url":"https://dealroom.so/glossary/partial-acquisition"},{"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":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/how-does-a-seller-note-on-partial-standby-affect-my-required-equity-injection-for-an-acqui","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."]}