Glossary · Your money in the deal
Full Standby Agreement
In short
This formal agreement puts a seller note or other debt 'on standby,' meaning no payments can be made until the SBA loan is fully repaid. It makes the seller's debt subordinate to the SBA loan.
What it means in a deal
If a seller note counts as your equity injection, the SBA usually requires a full standby. This means no principal or interest payments can be made to the seller until your SBA loan is fully repaid. Ensure your seller understands this restriction on their financing upfront.
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 Full Standby Agreement
- What are the specific conditions for an acceptable full standby agreement?
- What specific language must a seller standby agreement include to ensure full standby status for 7(a) equity injection?
- What specific language must a full standby agreement contain to be acceptable to the SBA?
- What specific language is required in a seller note's subordination agreement to ensure it counts as full standby equity?
- Can a full standby seller note accrue interest during the standby period?
- Can a seller note on full standby accrue interest during the standby period, even if not paid?
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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