A seller note is a loan the seller extends to the buyer for part of the purchase price, repaid over time with interest. In SBA deals, a seller note on full standby, no payments during the loan's life, can count for up to half of your 10% equity injection and keeps the seller invested in a smooth handoff.
Seller note in a capital stack
| Source | Amount | % |
|---|---|---|
| SBA 7(a) loan | $900,000 | 90% |
| Buyer cash | $50,000 | 5% |
| Seller note (standby) | $50,000 | 5% |
On full standby, that $50,000 note adds nothing to annual debt service, helping your DSCR while cutting the cash you bring.
Why it matters when buying a business
A seller note bridges price gaps, reduces your cash at close, and signals the seller believes in the business. Terms matter: a standby note helps SBA approval, while a note with payments adds to debt service. It's distinct from full seller financing, where the seller funds most or all of the deal.
