Glossary · Your money in the deal
Seller's equity
In short
The portion of the purchase price the seller leaves in the business as a loan to the buyer. It reduces your cash injection and shows the seller's confidence.
What it means in a deal
In an SBA 7(a) deal, seller's equity often takes the form of a seller note. This note is typically subordinated to the SBA loan, meaning the seller only gets paid after the SBA lender. It can help bridge financing gaps and is often required by SBA lenders to meet equity injection requirements. Negotiate the terms (interest rate, payment schedule, standby period) carefully.
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 Seller's equity
- Can a seller note be used to finance the entire seller's equity contribution to the buyer's business?
- Can the seller's contribution of working capital count towards my minimum equity injection?
- Can the seller's payment of closing costs on my behalf count towards my equity injection?
- What specific conditions make a seller's standby note eligible to count towards my equity injection?
- Can the seller's investment in the business immediately prior to sale count towards my equity injection?
- How does a lender verify a seller note's full standby status for 7(a) equity injection compliance?
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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