Glossary · Your money in the deal
Seller standby agreement(Standby agreement)
In short
A formal agreement where the seller agrees to defer repayment of any seller debt until the SBA loan is fully satisfied. This ensures the SBA lender is prioritized for repayment.
What it means in a deal
This agreement is mandatory for any seller debt included in an SBA 7(a) deal. It prevents the seller from competing with the SBA lender for repayments, which improves the business's debt service coverage. Ensure your LOI outlines the seller note's terms and standby status.
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 standby agreement
- Can a seller's post-closing consulting agreement influence the standby status of their seller note?
- Can the seller's post-closing consulting agreement influence the standby status of their seller note?
- What specific language must a seller standby agreement include to ensure full standby status for 7(a) equity injection?
- Does a seller's post-closing consulting agreement influence their standby note status with the SBA?
- What specific language is required in a seller note's subordination agreement to ensure it counts as full standby equity?
- What specific language must a standby agreement for a seller note include to meet SBA 7(a) requirements for equity injection?
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.
Figure out your down payment and equity injection
Tell us your purchase price and how you're funding the down payment — we'll sanity-check the equity injection and show what lenders will actually accept.
Free · No documents · Usually same-day
Backed by data on 1,000+ SBA lenders and 300,000+ funded deals. Your details go only to lending partners you ask to be matched with — never sold to advertisers.