{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/if-a-seller-note-on-full-standby-is-repaid-prematurely-what-are-the-lender-s-disclosure-ob","api_url":"https://dealroom.so/api/public/questions/if-a-seller-note-on-full-standby-is-repaid-prematurely-what-are-the-lender-s-disclosure-ob","question":"If a seller note on full standby is repaid prematurely, what are the lender's disclosure obligations to the SBA?","topic":"Standby agreements","audience":"lender","bot_mode":"lender","short_answer":"If a seller note on full standby is repaid prematurely, the lender has an obligation to promptly disclose this material change to the SBA, as it can impact the borrower's financial condition and potentially the guaranty.","rule":"Standby agreements are critical for strengthening the borrower's equity position. Any deviation, such as premature repayment, constitutes a material change in the loan's financial structure. Lenders are required to inform the SBA of such changes, as it could be considered an unapproved alteration to the loan terms or an eligibility issue, potentially leading to a guaranty repair or denial.","example":"A borrower, without notifying the lender, prematurely repays a $100,000 seller note that was on full standby. Upon discovery, the lender must immediately notify the SBA of this material event, providing details of the repayment and its impact on the borrower's cash flow and equity.","what_lenders_check":"Lenders must actively monitor for compliance with standby agreements. Failure to report premature repayments to the SBA promptly can be considered a material omission, jeopardizing the guaranty.","required_facts":["Standby note","Premature repayment","Disclosure obligation","Material change","Guaranty repair"],"source_families":["SOP 50 57 - 7(a) Loan Servicing and Liquidation","13 CFR Part 120 - Business Loans","SOP 50 10 - Lender and Development Company Loan Programs"],"official_sources":[{"title":"SOP 50 57 - 7(a) Loan Servicing and Liquidation","url":"https://www.sba.gov/sites/default/files/2025-09/FINAL%20SOP%205057%204%20version.pdf"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"},{"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"}],"related_questions":[{"question":"What documentation must a lender obtain to ensure a seller note is fully on standby and subordinated to the SBA 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-documentation-must-a-lender-obtain-to-ensure-a-seller-note-is-fully-on-standby-and-su"},{"question":"What specific financial covenants or conditions must be included in a seller note on full standby for a 7(a) acquisition loan?","url":"https://dealroom.so/for-lenders/questions/what-specific-financial-covenants-or-conditions-must-be-included-in-a-seller-note-on-full-"},{"question":"What specific language must a standby agreement for a seller note include to meet SBA 7(a) requirements for equity injection?","url":"https://dealroom.so/for-lenders/questions/what-specific-language-must-a-standby-agreement-for-a-seller-note-include-to-meet-sba-7-a-"},{"question":"What is the impact on an SBA 7(a) loan if a seller note on full standby is repaid prematurely without the lender's knowledge?","url":"https://dealroom.so/for-lenders/questions/what-is-the-impact-on-an-sba-7-a-loan-if-a-seller-note-on-full-standby-is-repaid-premature"},{"question":"What are the specific SBA requirements for a seller's note to be on full standby?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-sba-requirements-for-a-seller-s-note-to-be-on-full-standby"},{"question":"What specific language must a non-SBA third-party standby agreement include to ensure eligibility?","url":"https://dealroom.so/for-lenders/questions/what-specific-language-must-a-non-sba-third-party-standby-agreement-include-to-ensure-elig"}],"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":"2026-06-13","sba_rule_sources_checked_through":"2026-06-13"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/if-a-seller-note-on-full-standby-is-repaid-prematurely-what-are-the-lender-s-disclosure-ob","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."]}