Glossary · Your money in the deal
Partial Standby Seller Note
In short
A seller note where the seller agrees to defer some principal payments, or all principal and some interest payments, while the SBA loan is outstanding. This helps meet SBA equity injection rules.
What it means in a deal
With a partial standby, the seller note can either have deferred principal payments for the SBA loan term, or interest-only payments for the first two years, then principal and interest for the remainder of the SBA loan term. This arrangement boosts your equity injection for the SBA lender, showing more cash flow available for the SBA loan. Ensure you understand the specific deferral terms.
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 Seller Note
- How does partial standby treatment affect a seller's note for eligibility?
- Can a partial standby seller note include a provision for interest payments during the standby period?
- 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 requirements for a seller note to be structured with partial standby for a business acquisition?
- When can a lender permit a partial standby seller note if the total equity injection exceeds minimum requirements?
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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