SBA 7(a) Q&A
Short answer
No, if a seller note is not on full standby, meaning the seller receives payments, it generally cannot count towards the buyer's required equity injection.
To be included in the buyer's equity injection, a seller note must be on full standby, prohibiting any payments of principal or interest to the seller for the entire term of the SBA 7(a) loan. If payments are permitted, it is considered debt, not equity.
If a seller note of $50,000 allows for monthly payments of $500, it would not qualify as part of the buyer's 10% equity injection for a $1,000,000 acquisition. The buyer would need to find an alternative $50,000 in eligible equity.
Insider move
Lenders carefully review the seller note agreement to confirm its full standby status. Any deviation from the full standby requirement will result in the note being excluded from the equity calculation, potentially requiring the buyer to source additional funds.
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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