{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-are-the-specific-requirements-for-a-partner-buyout-with-an-sba-7-a-loan-when-one-part","api_url":"https://dealroom.so/api/public/questions/what-are-the-specific-requirements-for-a-partner-buyout-with-an-sba-7-a-loan-when-one-part","question":"What are the specific requirements for a partner buyout with an SBA 7(a) loan when one partner is departing?","topic":"Partner buyouts","audience":"borrower","bot_mode":"buyer","short_answer":"For a partner buyout with an SBA 7(a) loan, the departing owner must entirely sever their relationship with the business, including any ownership, management, and financial ties, except for a possible seller note on full standby.","rule":"The SBA treats partner buyouts as a change of ownership. The departing owner cannot retain any ownership interest, board seats, or management role. Any seller note provided by the departing partner must be on full standby, meaning no payments (principal or interest) are made until the SBA loan is fully repaid, unless specific conditions for partial standby are met and approved.","example":"If Partner A sells their 50% stake to Partner B using an SBA loan, Partner A must resign from all company positions, transfer all shares, and any seller note they provide to Partner B must be on full standby. They cannot remain as a consultant with an ongoing payment stream that acts like debt.","what_lenders_check":"Lenders must ensure a complete change of ownership and control from the departing partner, verifying no residual ties exist that could compromise the business or create an impermissible financial arrangement. They will review all legal agreements, including stock purchase agreements and seller note terms.","required_facts":["Partner buyout","Change of ownership","Full standby","Severed ties","Seller note","Departing owner"],"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 I'm buying out a partner, does the remaining partner also need to personally guarantee the SBA loan for $500,000?","url":"https://dealroom.so/sba-7a/questions/if-i-m-buying-out-a-partner-does-the-remaining-partner-also-need-to-personally-guarantee-t"},{"question":"If I am buying out a partner, does the SBA require the business to pass a cash flow test post-acquisition?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-does-the-sba-require-the-business-to-pass-a-cash-flow-test-po"},{"question":"If I am buying out a partner, how does the SBA ensure the purchase price is fair and justifiable?","url":"https://dealroom.so/sba-7a/questions/if-i-am-buying-out-a-partner-how-does-the-sba-ensure-the-purchase-price-is-fair-and-justif"},{"question":"Can an SBA 7(a) loan be used to purchase a business if the seller will retain a minority ownership stake?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-purchase-a-business-if-the-seller-will-retain-a-minority-ow"},{"question":"What are the requirements for the seller in an SBA 7(a) business acquisition loan?","url":"https://dealroom.so/sba-7a/questions/what-are-the-requirements-for-the-seller-in-an-sba-7-a-business-acquisition-loan"},{"question":"Can an SBA 7(a) loan be used to fund a partner buyout with an earn-out provision?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-be-used-to-fund-a-partner-buyout-with-an-earn-out-provision"}],"related_terms":[{"term":"Buyout of a Partner","url":"https://dealroom.so/glossary/buyout-of-a-partner"},{"term":"SBA 7(a) loan","url":"https://dealroom.so/glossary/sba-7-a-loan"},{"term":"Partner buyout","url":"https://dealroom.so/glossary/partner-buyout"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"SBA 7(a) Loan Program","url":"https://dealroom.so/glossary/sba-7-a-loan-program"},{"term":"SBA 7(a) loan guaranty","url":"https://dealroom.so/glossary/sba-7-a-loan-guaranty"}],"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/what-are-the-specific-requirements-for-a-partner-buyout-with-an-sba-7-a-loan-when-one-part","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."]}