Glossary · Your money in the deal
Contingent Seller Financing(Earnout, Performance-based seller note)
In short
This is a seller note where repayment is tied to the future performance of the business. If the business doesn't meet specific targets, the seller may not get paid.
What it means in a deal
The SBA views this as an Earnout or Seller Note. For SBA 7(a) loans, seller financing must typically be on "full standby" or "partial standby" for the life of the loan. Contingent payments are usually not allowed to impact the buyer's ability to repay the SBA loan.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Contingent Seller Financing
- Does the SBA 7(a) loan program allow for seller training period financing?
- How does seller financing structure impact the required equity injection for a business acquisition?
- What specific due diligence is required for seller financing in a change of ownership?
- What specific due diligence is needed for seller financing that is not on full standby?
- How much of my equity injection must be cash, rather than other assets or seller financing?
- Does the SBA 7(a) loan program allow for seller training period financing for the buyer?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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