Glossary · Doing the deal
In short
This is a legal document where one creditor agrees to take a lower priority position than another in the event of default. For an SBA loan, the seller note almost always needs to be subordinated.
If the seller is providing financing (a seller note), the SBA lender will require a full standby agreement. This means the seller cannot receive principal or interest payments until the SBA loan is fully repaid, or a partial standby, which has specific conditions. This ensures the SBA loan has repayment priority.
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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