Examples: Full Standby Seller Notes

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May 03, 2022

by a searcher from Brigham Young University in Dallas, TX, USA

I'd love to get some examples of how others have structured seller notes on full standby to the SBA. I have the following questions:
- What is the typical term? Is it most common to simply have a balloon payment at the end of the SBA term? Is it typical to do a longer term than the SBA loan and amortize once SBA is extinguished?
- Simple vs. Compound? Which is more common?
- For compound - is it only the interest that typically compounds, or is it the entire amount (principle + interest)?

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commentor profile
Reply by a searcher
in Boston, MA, USA
You should discuss this with your SBA lender. We had a full standby sellers note negotiated on our original deal but the lender came back with the following after looking at the full financial package:

Seller Note ####-###-#### % of total project costs, full standby for the term of the loan.
Seller Note #2 (OTHER per the Project Cost###-###-#### % of total project costs, 2-year standby with DSCR provisions of 1..25x. Payments can begin year three with a minimum amortization of seven-years.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
There are a lot of different ways to structure the seller notes. Some will depend on what the lender will allow. All depend on what the cash flow will allow. I would be more than happy to talk through options with you at any time. I can be reached directly at redacted
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