{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/is-there-a-maximum-percentage-of-the-equity-injection-that-can-come-from-a-seller-note-on-","api_url":"https://dealroom.so/api/public/questions/is-there-a-maximum-percentage-of-the-equity-injection-that-can-come-from-a-seller-note-on-","question":"Is there a maximum percentage of the equity injection that can come from a seller note on standby?","topic":"Seller Notes & Standby","audience":"borrower","bot_mode":"buyer","short_answer":"Yes, for business acquisitions, a seller note on full standby generally cannot exceed half of the total required equity injection.","rule":"The SBA generally requires that a minimum of half of the total equity injection must come from the buyer's own cash or unencumbered assets. This means if the minimum equity injection is 10%, at least 5% must be cash from the buyer, and the remaining 5% can potentially be a seller note on full standby.","example":"If the total required equity injection is $100,000 for a $1,000,000 acquisition, at least $50,000 must come from the buyer's cash or unencumbered assets. A seller note on full standby could then make up a maximum of the remaining $50,000.","what_lenders_check":"Lenders ensure the buyer has substantial personal capital at risk, not just seller financing. They meticulously verify that the buyer's direct cash contribution meets the minimum threshold before allowing a seller note to count towards the remainder of the equity injection.","required_facts":["Seller note","Full standby","Maximum percentage","Buyer cash injection","Equity injection"],"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":"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":"If a seller note is on full standby, when can the seller start receiving principal payments?","url":"https://dealroom.so/sba-7a/questions/if-a-seller-note-is-on-full-standby-when-can-the-seller-start-receiving-principal-payments"},{"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":"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":"Indemnification from the Seller","url":"https://dealroom.so/glossary/indemnification-from-the-seller"},{"term":"Seller note","url":"https://dealroom.so/glossary/seller-note"},{"term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"term":"Acceleration of the Note","url":"https://dealroom.so/glossary/acceleration-of-the-note"},{"term":"Holder of the Note","url":"https://dealroom.so/glossary/holder-of-the-note"},{"term":"Seller standby note","url":"https://dealroom.so/glossary/seller-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/is-there-a-maximum-percentage-of-the-equity-injection-that-can-come-from-a-seller-note-on-","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."]}