Glossary · Your money in the deal
In short
This occurs when seller financing is structured to appear as equity, a gift, or another form of capital to circumvent SBA's standby requirements for seller notes. The SBA rigorously scrutinizes transactions for this.
The SBA requires seller notes to be on full standby, meaning no payments can be made until the SBA loan is repaid. Sellers sometimes try to structure payments or 'consulting fees' to bypass this. Your lender will identify and reclassify any disguised seller financing, potentially jeopardizing your deal if not disclosed upfront. Be transparent.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Defined by DealRoom.so SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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