{"ok":true,"canonical_url":"https://dealroom.so/sba-7a/questions/what-if-the-seller-note-is-not-on-full-standby-can-it-still-count-toward-equity","api_url":"https://dealroom.so/api/public/questions/what-if-the-seller-note-is-not-on-full-standby-can-it-still-count-toward-equity","question":"What if the seller note is not on full standby; can it still count toward equity?","topic":"Seller notes & equity","audience":"borrower","bot_mode":"buyer","short_answer":"No, if a seller note is not on full standby, meaning the seller receives payments, it generally cannot count towards the buyer's required equity injection.","rule":"To be included in the buyer's equity injection, a seller note must be on full standby, prohibiting any payments of principal or interest to the seller for the entire term of the SBA 7(a) loan. If payments are permitted, it is considered debt, not equity.","example":"If a seller note of $50,000 allows for monthly payments of $500, it would not qualify as part of the buyer's 10% equity injection for a $1,000,000 acquisition. The buyer would need to find an alternative $50,000 in eligible equity.","what_lenders_check":"Lenders carefully review the seller note agreement to confirm its full standby status. Any deviation from the full standby requirement will result in the note being excluded from the equity calculation, potentially requiring the buyer to source additional funds.","required_facts":["Not full standby","Payments allowed","Not equity","Debt classification","Additional funds needed"],"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":"What is the maximum percentage of a seller note that can count towards my equity injection?","url":"https://dealroom.so/sba-7a/questions/what-is-the-maximum-percentage-of-a-seller-note-that-can-count-towards-my-equity-injection"}],"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/what-if-the-seller-note-is-not-on-full-standby-can-it-still-count-toward-equity","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."]}