For SBA lenders
Short answer
If the seller remains a key employee, the lender must ensure the arrangement is for a limited transition period and does not grant the seller excessive control. The compensation must be reasonable and documented.
When a seller remains employed post-closing, the lender must ensure this arrangement does not create an ongoing affiliation that would impact the buyer's small business eligibility or suggest the buyer lacks independent control. The employment term should be short (typically 6-12 months) and defined, focusing on training and transition. Compensation must be at fair market value and documented to avoid appearing as disguised seller financing or control.
For a business acquisition financed by a $900,000 7(a) loan, the seller stays on for six months to train the new owner. The lender reviews the consulting agreement to ensure the salary is reasonable, the term is limited, and the seller has no operational control, only advisory duties.
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
13 CFR Part 121 - Small Business Size Regulations
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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