{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/what-specific-terms-must-a-lender-ensure-are-included-in-a-standby-agreement-for-a-loan-fr","api_url":"https://dealroom.so/api/public/questions/what-specific-terms-must-a-lender-ensure-are-included-in-a-standby-agreement-for-a-loan-fr","question":"What specific terms must a lender ensure are included in a standby agreement for a loan from an investor that counts as equity?","topic":"Standby agreements","audience":"lender","bot_mode":"lender","short_answer":"A standby agreement for an investor loan counting as equity must explicitly state full subordination to the SBA loan, no payments (principal or interest) until the SBA loan is paid in full, and a lien subordination.","rule":"For an investor loan to be treated as equity for SBA purposes, it must be on 'full standby.' This means the agreement must contain specific language ensuring no payments of principal or interest are made on the investor loan, and no collateral is taken, until the SBA loan is fully satisfied. It must also prohibit acceleration of the investor loan for any reason.","example":"An investor provides a $100,000 loan to the borrower as part of the equity injection. The lender drafts a standby agreement stating the loan is fully subordinated to the SBA 7(a) loan, with no payments of principal or interest allowed, and no security interest taken by the investor, until the SBA loan is paid in full.","what_lenders_check":"Lenders must ensure the standby agreement precisely meets SBA requirements. Any deviation, such as allowing interest payments or an acceleration clause, will disqualify the investor loan from being considered equity and can lead to a guaranty repair or denial.","required_facts":["Investor loan","Standby agreement","Equity injection","Full subordination","No payments/liens"],"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":"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":"Standby Terms","url":"https://dealroom.so/glossary/standby-terms"},{"term":"Loan Terms","url":"https://dealroom.so/glossary/loan-terms"},{"term":"Standby agreement","url":"https://dealroom.so/glossary/standby-agreement"},{"term":"Seller standby agreement","url":"https://dealroom.so/glossary/seller-standby-agreement"},{"term":"Partial Standby Agreement","url":"https://dealroom.so/glossary/partial-standby-agreement"},{"term":"Full Standby Agreement","url":"https://dealroom.so/glossary/full-standby-agreement"}],"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/what-specific-terms-must-a-lender-ensure-are-included-in-a-standby-agreement-for-a-loan-fr","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."]}