SBA 7(a) Q&A
Short answer
Yes, if structured as a fully subordinated seller note on full standby, the seller's contribution of working capital can count towards the buyer's equity injection.
For a seller's working capital contribution to qualify as equity, it must meet the strict requirements for a full standby seller note. This means no principal or interest payments are made to the seller until the SBA loan is fully repaid, and the note is fully subordinated to the SBA loan, without collateral on SBA-pledged assets.
If a seller provides $50,000 in working capital to the business as part of the sale, and this is documented as a seller note on full standby, it can be counted towards the buyer's required 10% equity injection for a $500,000 acquisition.
Lenders must verify that the seller's working capital contribution is genuinely at risk and fully subordinated. They ensure all documentation, including the standby agreement, clearly outlines the terms and conditions to meet SBA requirements for equity.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
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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