SBA 7(a) Q&A
Short answer
Yes, any payments to the seller post-closing, including consulting fees, must be carefully structured to ensure they do not circumvent standby note requirements.
If a seller has a note on full standby, any other payments to them (e.g., consulting fees, lease payments for seller-owned property, salary) must be for bona fide, reasonable services or expenses. Payments that are disguised forms of debt repayment or that are excessive for the services rendered can violate the standby agreement and jeopardize the SBA guaranty.
A seller provides a $50,000 standby note and also signs a 6-month consulting agreement for $5,000 per month. The consulting fees must be for actual, documented services and at fair market value. If the fees are deemed excessive or a way to circumvent the standby, it could be problematic for the SBA loan.
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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