SBA 7(a) Q&A
Short answer
Yes, a seller's post-closing consulting agreement can influence the standby status of their seller note, as excessive compensation might be viewed as a disguised payment.
If a seller has a note on full standby, they cannot receive any payments. However, a separate bona fide consulting agreement for legitimate services at fair market value is permissible. Lenders scrutinize consulting fees to ensure they are not a way to indirectly pay down the standby note or extract cash from the business at the expense of the SBA loan. Excessive fees could be considered a form of repayment.
A seller provides a $100,000 note on full standby. Simultaneously, the buyer signs a consulting agreement paying the seller $5,000 per month for 12 months. If the consulting services are minimal or the fee is significantly above market rate, the lender might view this as an attempt to circumvent the standby agreement.
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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