Glossary · Your money in the deal
Standby Terms(Standby agreement)
In short
These are conditions under which a seller note or other debt from an owner is subordinated to the SBA loan. This means the SBA lender gets paid first.
What it means in a deal
If the seller is financing a portion of the deal, their loan to you might be subject to standby terms, meaning they can't be paid principal or interest until the SBA loan is repaid, or under specific conditions. This strengthens the SBA loan's position and reduces the risk for the lender. This is often an "equity injection" substitute.
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 Standby Terms
- What are the specific terms for the duration of a seller note on full standby?
- What specific terms must a seller note on full standby have to be acceptable for an SBA loan?
- How does the SBA verify the terms of a seller note, including its standby status, for an acquisition?
- Does a seller note always have to be on "full standby" or are other terms allowed for SBA purposes?
- What specific terms are required for a seller note to be on *full* standby for a 7(a) loan?
- What happens to the SBA loan application if the seller refuses to agree to the standby terms for their note?
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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