SBA 7(a) Q&A
Short answer
Generally, a full standby seller note does not automatically prevent the seller from receiving reasonable consulting fees, provided these fees are for actual services, are market rate, and do not create an affiliation or undue influence.
While a full standby seller note prohibits principal and interest payments, it doesn't necessarily bar all payments to the seller. Consulting agreements can be permissible if they are for legitimate, necessary services, are paid at arm's-length market rates, and are clearly documented. The SBA's primary concern is that the seller's ongoing role does not constitute continued control or an arrangement to circumvent the standby agreement, or that the consulting fees are excessive and impair the business's debt service ability.
A seller provides a $100,000 full standby note for a $1,000,000 business. They can also be paid $2,000 per month for six months as a consultant to train the new owner, provided this fee is reasonable for the services and does not affect the business's ability to repay the SBA loan.
Insider move
Lenders will closely review any post-closing agreements with the seller, especially consulting contracts. They'll verify the legitimacy of the services, the reasonableness of the fees, and ensure that the arrangement doesn't undermine the standby agreement or the new owner's control of the business.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. 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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