Borrower guide · Buying a business
Seller financing on an SBA acquisition
A seller who is willing to carry part of the price can be the difference between closing and walking — but only if the note is structured the way the SBA requires.
Two different jobs a seller note can do
Seller financing shows up in SBA deals in two distinct roles, and confusing them causes most of the trouble. First, it can help satisfy your equity injection. Second, it can be plain gap financing that fills the space between the SBA loan and the price. The rules differ.
Counting toward your injection: the standby rule
To count as part of the required 10% injection on a change of ownership, a seller note must be on full standby for at least 24 months — the seller receives nothing during that window — and it can cover no more than 50% of the required injection. On a $600,000 purchase (10% = $60,000), the seller could carry $30,000 on standby while you inject $30,000 in cash.
Carrying more than the injection
A seller can also finance beyond the injection — say, to bridge a valuation gap. That portion is subordinated to the SBA loan and does not need full standby, though lenders often want partial standby (interest-only, or no payments for a period). It is negotiable, deal by deal.
Why sellers agree to it
A note keeps the seller invested in a clean transition and can improve their tax position by spreading the gain. It also signals confidence in the business — underwriters read a willing seller note as a good sign, not a red flag.
Equity injection calculator
See how much a standby seller note could cover, and the cash you still need to inject.
Split cash vs. seller note →The typical acquisition, sized
our dataHalf of all 7(a) loans fall between $55k and $500k (median $178,850), and acquisitions cluster at the higher end — so a standby seller note is often carrying $10k–$40k of a mid-six-figure deal. Model your exact split below.
Common questions
Can the seller finance my SBA down payment?
Up to half of the required 10% equity injection, and only if the seller note is on full standby — no payments — for at least the first two years.
What is full standby?
A loan on which the holder receives no payments of principal or interest for a set period. The SBA requires 24 months of full standby for a seller note to count toward your injection.
Can a seller carry more than the down payment?
Yes. Beyond the injection, a seller can provide additional financing subordinated to the SBA loan, on terms you negotiate — often partial standby rather than full.
Keep going
Rules described here follow SBA SOP 50 10 8 (effective June 1, 2025) and can change; lenders add their own overlays. This is education, not advice — confirm specifics with your lender. Figures cited as “our data” come from the SBA 7(a) & 504 FOIA record, released 2026-06-30.