SBA 7(a) Q&A
Short answer
No, if a seller note is to count towards the equity injection, it must be on full standby for the entire term of the SBA loan.
For any portion of a seller note to be recognized as part of the required equity injection, the entire seller note must be on full standby, meaning no payments of principal or interest are permitted until the SBA 7(a) loan is completely repaid. Partial standby is not allowed for equity injection purposes.
If a seller note of $50,000 is intended to satisfy a portion of the equity injection, the seller cannot receive any principal or interest payments on that $50,000 until the SBA loan is retired.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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
SBA Form 1919 - Borrower Information Form
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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