Glossary · The loan itself
In short
This is a seller note where the seller agrees that repayment of their note is entirely secondary to the SBA 7(a) loan. As a buyer, you care because this note can count towards your minimum equity injection.
In an SBA acquisition, a fully subordinated seller note is crucial for meeting the equity injection requirements. The seller cannot receive any principal or interest payments on this note until the SBA loan is fully repaid, or certain conditions are met, as stipulated in a full standby agreement. This arrangement reduces risk for the SBA lender.
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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