Glossary · Doing the deal
In short
A legally binding document where the seller agrees that their financing (seller note) will be paid back only after the SBA 7(a) loan is fully satisfied. This is a standard SBA requirement for seller financing.
If a seller note is part of your deal, the SBA will require a Seller Note Subordination Agreement, also known as a Standby Agreement, making the seller's debt "full standby." This means the seller cannot receive any payments on their note until the SBA loan is repaid, ensuring the SBA lender has first claim on the business's cash flow. It functions as part of your equity injection.
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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