SBA 7(a) Q&A
Short answer
A seller note on full standby can contribute towards the borrower's equity injection, but generally, at least half of the total required equity must be from the buyer's own cash or eligible assets. This means the seller note typically cannot exceed 50% of the required injection.
SBA rules require a minimum 10% equity injection for most business acquisitions. If a seller note is used to supplement the buyer's cash injection, it must be on 'full standby' for the life of the SBA loan. While a seller note can be part of the total injection, the SBA mandates that the buyer provide at least half of the total required equity from their own resources, ensuring a significant personal stake.
For a $1,000,000 business acquisition requiring a 10% ($100,000) equity injection, the buyer must contribute at least $50,000 in cash. The remaining $50,000 could potentially come from a fully subordinated seller note.
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 2026-06-14. 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 & standby
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