For SBA lenders
Short answer
A full standby seller note must have no payments of principal or interest for the life of the SBA loan, or a minimum of two years, and must be completely subordinated to the SBA loan.
SOP 50 10 dictates that seller notes used to meet the equity injection requirement must be on "full standby." This means no payments of principal or interest can be made on the seller's note for the duration of the SBA loan, or at least for two years (whichever is greater), and it must be fully subordinated to the SBA's lien position.
A $100,000 seller note is required for equity injection. The lender structures the note with a 10-year term, no payments for the first two years, and a written subordination agreement confirming its junior position to the SBA loan.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Standard 7(a) Authorization File Library
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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