SBA 7(a) Q&A
Short answer
Yes, a seller note can count towards the buyer's equity injection, but it must be on full standby for the life of the SBA loan.
For a seller note to be part of the required equity injection, it must be on full standby for the entire term of the SBA loan, meaning no payments of principal or interest can be made until the SBA loan is fully repaid. This ensures the seller's capital remains in the business as true equity-like support.
If a business sells for $1,000,000 and requires a 10% equity injection ($100,000), the buyer could contribute $50,000 cash and the seller could provide a $50,000 standby note.
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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