Glossary · Your money in the deal
Partial Standby Agreement
In short
This agreement allows a seller or other subordinated creditor to receive interest payments, but no principal payments, until the SBA loan is repaid. It's a less restrictive form of standby than a full standby.
What it means in a deal
For seller notes counting as equity, the SBA might allow a partial standby if certain conditions are met, letting the seller collect interest. This can make the deal more attractive to a seller than a full standby. Your lender will guide you on the specific requirements.
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 Partial Standby Agreement
- Can a partial standby seller note include a provision for interest payments during the standby period?
- How does partial standby treatment affect a seller's note for eligibility?
- Can a seller note on partial standby count towards the required equity injection?
- How does a seller note on *partial* standby affect my required equity injection for an acquisition?
- What are the specific conditions for an acceptable full standby agreement?
- What are the requirements for a seller note to be structured with partial standby for a business acquisition?
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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