{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-full-standby-can-it-still-have-a-fixed-interest-rate","api_url":"https://dealroom.so/api/public/questions/if-a-seller-note-is-on-full-standby-can-it-still-have-a-fixed-interest-rate","question":"If a seller note is on full standby, can it still have a fixed interest rate?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, a seller note on full standby can have a fixed interest rate, but no principal or interest payments can be made on that note while it is on full standby.","rule":"The key requirement for a full standby seller note is that no payments of principal or interest are made to the seller during the term of the SBA loan (or a specified minimum period, typically two years). However, the note itself can still stipulate an interest rate, which may accrue and become payable once the standby period ends or the SBA loan is repaid. The interest rate type (fixed or variable) is not restricted, only the payment schedule.","example":"A seller note for $75,000 is on full standby for an SBA loan. The note specifies a fixed interest rate of 6%. While the note is on full standby, no payments are made. The accrued interest would be added to the principal balance, becoming payable once the standby period concludes.","what_lenders_check":"Lenders primarily ensure that the terms of the standby agreement explicitly prohibit any payments, including interest, during the standby period. They confirm that the accrual of interest won't create an unmanageable balloon payment that could jeopardize the business's ability to repay the SBA loan later.","required_facts":["Seller note interest","Full standby terms","No payments","Accrued interest"],"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":"Seller note on standby","url":"https://dealroom.so/glossary/seller-note-on-standby"},{"term":"Seller Financing on Full Standby","url":"https://dealroom.so/glossary/seller-financing-on-full-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":"Fixed interest rate","url":"https://dealroom.so/glossary/fixed-interest-rate"},{"term":"Partial Standby Seller Note","url":"https://dealroom.so/glossary/partial-standby-seller-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/if-a-seller-note-is-on-full-standby-can-it-still-have-a-fixed-interest-rate","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."]}