Seller Financing with SBa

June 21, 2025

by a searcher from University of California, Los Angeles in Los Angeles, CA, USA

We all know of the new changes. I’m curious how many offers will be accepted with a seller note now. What are strategies to still protect ourselves as buyers when doing a transaction when a seller doesn’t want to hold a note for ten years?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Daniel, I concur with the above. The only time the seller note needs to be on a 10-year standby if it is being used as part of your equity contribution, and in that case it cannot represent more than 5% of that contribution. You can always have other sellers notes in full repayment from day one, on shorter standby, with forgiveness in them, with shorter amortizations, with balloons, etc., so long as they work with the cash flow available. If you would like to discuss options you can reach me here or directly at redacted Seller notes are very common in all purchases with or without SBA financing. Prior to the last two years the SBA required seller notes that were part of equity to be on full standby for 10 years, and we still saw plenty of deals getting structured that way. So I envision sellers will still hold 5% seller notes for 10 years.

Reply by a professional
from Western Michigan University in Columbus, OH, USA

In the deals we have done. We structure the offer ignoring the 5% stand-by note and tack in on at the end and call it an incentive note, or bonus. Sellers do hate the 10-year standby but if you frame it that way and they get what they want upfront, they are usually fine.

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