{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-happens-if-my-150-000-seller-note-is-partially-on-standby-and-partially-paid-out-at-c","api_url":"https://dealroom.so/api/public/questions/what-happens-if-my-150-000-seller-note-is-partially-on-standby-and-partially-paid-out-at-c","question":"What happens if my $150,000 seller note is partially on standby and partially paid out at closing?","topic":"Seller notes & standby","audience":"borrower","bot_mode":"buyer","short_answer":"If a seller note is partially on standby, only the portion that is on full standby (no payments until the SBA loan is repaid) can count towards the buyer's equity injection.","rule":"SBA rules differentiate between 'full standby' (no payments allowed for the life of the SBA loan) and 'partial standby' (payments are permitted, but usually junior to the SBA loan). Only the portion on full standby contributes to the buyer's required equity injection. The portion paid out at closing or on partial standby is treated as part of the purchase price that the SBA loan helps finance or as additional debt.","example":"A $150,000 seller note consists of $50,000 paid at closing and $100,000 on full standby. Only the $100,000 portion will be recognized as part of the buyer's equity injection. The $50,000 paid at closing must be covered by the SBA loan or buyer's cash.","what_lenders_check":"Lenders will clearly separate the different components of a seller note. They ensure that only the fully subordinated, non-paying portion is credited towards equity injection, and they will document the terms for any non-standby or partial standby portions.","required_facts":["Seller note","Partial standby","Full standby","Equity injection","Payments at closing","Subordination terms"],"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 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"},{"term":"Seller note","url":"https://dealroom.so/glossary/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/what-happens-if-my-150-000-seller-note-is-partially-on-standby-and-partially-paid-out-at-c","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."]}