Glossary · The loan itself
Non-standby debt
In short
This is debt owed by the business or its owners that does not need to be subordinated to the SBA loan. It can be repaid normally, unlike standby debt.
What it means in a deal
For a 7(a) loan, any existing debt from the seller to the business, or from you to the business, must be analyzed. Non-standby debt is typically allowed to continue repayment, but the lender will assess its impact on global cash flow and the business's ability to service 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 Non-standby debt
- What happens if a seller note on standby is subordinate to another non-SBA debt?
- How does a lender verify the full standby status of a non-SBA third-party debt?
- What are the conditions under which a seller note on full standby can be subordinated to other non-SBA debt?
- How does a lender verify the full standby status of a non-SBA debt to ensure eligibility for a 7(a) loan?
- How does a seller note on full standby affect the debt service coverage ratio calculation?
- Can working capital funds from the SBA loan be used to pay off existing non-SBA business debt?
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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