SBA 7(a) Q&A
Short answer
Yes, a seller who provides a fully subordinated note can remain an employee or consultant, but the terms of their compensation must be reasonable.
The SBA allows a seller to remain involved in the business post-acquisition, even if they have a fully subordinated seller note. However, any compensation for their employment or consulting services must be reasonable and not excessive, ensuring it doesn't negatively impact the business's ability to repay the SBA loan.
A buyer acquires a $1 million business with a $100,000 seller note on full standby. The seller stays on as a consultant for one year, earning $5,000 per month, which is deemed fair market value for their services.
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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