SBA 7(a) Q&A
Short answer
No, a seller note is typically a portion of the purchase price and not usually structured as the seller's 'equity contribution' to the buyer's business. It serves as seller financing that may help the buyer meet their equity injection.
A seller note represents deferred payment for a portion of the business's purchase price from the buyer to the seller. While a portion of a fully subordinated seller note can count towards the buyer's minimum equity injection, it is not considered the seller's 'equity contribution' in the new ownership structure. The seller is typically exiting, and the note is debt owed to them by the buyer, albeit subordinated.
If a business is valued at $800,000, and you require $80,000 (10%) equity injection. You contribute $40,000 cash, and the seller provides a $40,000 seller note on full standby to complete the injection. This seller note is part of the purchase price financing, not the seller contributing equity to your operating entity.
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
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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