Full standby

Definition

A seller note that receives no payments while the SBA loan runs.

Why It Matters

It changes the seller-note negotiation materially, because a seller on full standby collects nothing for years and is betting on your success to ever be paid. That is also why the note can count toward your equity injection: the SBA treats money the seller cannot touch as if it were your own cash in the deal.

In numbers: A $100,000 seller note on full standby for a 10-year loan pays the seller nothing, principal or interest, until the 7(a) is retired; under the mid-2025 rules it can also satisfy at most 50% of the required injection, so it replaces $50,000 of the buyer's cash at close, not $100,000.