SBA 7(a) Q&A
Short answer
No, a seller note that is not on full standby, meaning the seller receives payments during the SBA loan term, typically cannot count as part of the buyer's required equity injection.
For a seller note to be counted towards the buyer's equity injection, it must be on 'full standby,' where no payments of principal or interest are made to the seller for the life of the SBA loan. If payments are allowed, even deferred or partial, the SBA considers it debt, not equity, and thus it cannot fulfill the injection requirement.
If you negotiate a $50,000 seller note with a 5-year term where the seller receives interest-only payments for the first year, this note would not count towards your 10% equity injection for a $500,000 acquisition because it is not on full standby.
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 2026-06-13. 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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