{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/how-does-the-sba-handle-a-situation-where-the-seller-desires-to-remain-as-a-paid-consultan","api_url":"https://dealroom.so/api/public/questions/how-does-the-sba-handle-a-situation-where-the-seller-desires-to-remain-as-a-paid-consultan","question":"How does the SBA handle a situation where the seller desires to remain as a paid consultant post-closing?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"If a seller remains as a paid consultant, their compensation must be reasonable and market-based for the services provided, and it cannot interfere with any full standby seller note arrangements.","rule":"The SBA allows for sellers to remain as consultants post-closing to assist with transition, but the compensation must be for legitimate services at fair market value and documented separately. It cannot be a disguised form of loan repayment or a way to circumvent standby requirements for a seller note.","example":"A seller provides a $200,000 standby note for a business acquisition and also enters a 6-month consulting agreement for $5,000 per month. The consulting fee is permissible if it's fair market value for the services, and the standby note terms remain unaffected.","what_lenders_check":"Lenders will scrutinize consulting agreements to ensure they are legitimate, market-based, and do not represent a form of disguised debt repayment or an attempt to circumvent the full standby requirement for any seller note.","required_facts":["Seller consultant","Post-closing","Compensation","Market value","Standby seller note","Disguised debt"],"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":"Repair to the guaranty","url":"https://dealroom.so/glossary/repair-to-the-guaranty"},{"term":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"term":"SBA 7(a) program","url":"https://dealroom.so/glossary/sba-7-a-program"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Pre-paid lease","url":"https://dealroom.so/glossary/pre-paid-lease"},{"term":"Pre-Paid Expenses","url":"https://dealroom.so/glossary/pre-paid-expenses"}],"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/how-does-the-sba-handle-a-situation-where-the-seller-desires-to-remain-as-a-paid-consultan","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."]}