{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-full-standby-when-can-the-seller-start-receiving-principal-payments","api_url":"https://dealroom.so/api/public/questions/if-a-seller-note-is-on-full-standby-when-can-the-seller-start-receiving-principal-payments","question":"If a seller note is on full standby, when can the seller start receiving principal payments?","topic":"Seller Notes & Standby","audience":"borrower","bot_mode":"buyer","short_answer":"A seller note on full standby cannot receive any principal payments until the SBA 7(a) loan is paid in full.","rule":"Full standby means that the seller's note is completely subordinated to the SBA loan. Neither principal nor interest payments can be made on the seller note for the entire duration of the SBA loan. The note essentially acts as a part of the borrower's equity until the SBA loan is retired.","example":"If you have a $100,000 seller note on full standby as part of your $900,000 SBA loan with a 10-year term, the seller cannot receive any principal payments on that $100,000 note until after your 10-year SBA loan is fully repaid.","what_lenders_check":"Lenders strictly enforce the full standby provisions to protect the SBA's senior position. They monitor for any unauthorized payments to the seller during the standby period, which could jeopardize the SBA guaranty.","required_facts":["Full standby status","SBA loan paid in full","No principal payments","Standby agreement enforcement"],"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":"Can a seller note on full standby still be secured by business assets?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-on-full-standby-still-be-secured-by-business-assets"},{"question":"What are the requirements if the seller wants to stay involved in the business post-acquisition?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-if-the-seller-wants-to-stay-involved-in-the-business-post-acquis"},{"question":"What are the specific terms for the duration of a seller note on full standby?","url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-terms-for-the-duration-of-a-seller-note-on-full-standby"},{"question":"Can a seller note on full standby accrue interest during the standby period, even if not paid?","url":"https://dealroom.so/sba-7a/questions/can-a-seller-note-on-full-standby-accrue-interest-during-the-standby-period-even-if-not-pa"},{"question":"Is there a maximum percentage of the equity injection that can come from a seller note on standby?","url":"https://dealroom.so/sba-7a/questions/is-there-a-maximum-percentage-of-the-equity-injection-that-can-come-from-a-seller-note-on-"},{"question":"What specific terms must a seller note on full standby have to be acceptable for an SBA loan?","url":"https://dealroom.so/sba-7a/questions/what-specific-terms-must-a-seller-note-on-full-standby-have-to-be-acceptable-for-an-sba-lo"}],"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":"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":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-full-standby-when-can-the-seller-start-receiving-principal-payments","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."]}