SBA 7(a) Q&A
Short answer
A seller note on full standby can count for up to 50% of the buyer's minimum required equity injection, provided the other 50% is unencumbered cash.
The SBA typically requires the buyer's minimum equity injection to be 10% of the total project cost. Of this, at least half (5% of total project cost) must be actual unencumbered cash from the buyer. The remaining half (up to 5% of total project cost) can be a seller note on full standby.
For a $2,000,000 business acquisition with a required $200,000 (10%) equity injection, the buyer must inject at least $100,000 in cash. The remaining $100,000 could be a seller note on full standby.
Insider move
Lenders verify that the buyer provides at least the minimum cash portion of the equity. They ensure the seller note explicitly meets all full standby requirements, including the absence of payments and liens.
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.
More on seller notes & equity
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day