Seller Financing Note
The promissory note that finances part of the purchase price, and where seller-friendly terms quietly compound your downside.
- Standby period and SBA compliance
- Default and cure periods
- Acceleration triggers
- Subordination to senior debt
If this clause already feels aggressive in isolation, upload the full contract and see how it combines with payment terms, liabilities, and exit rights.
Analyze My ContractWhat this clause actually does
A seller financing note is a promissory note from the buyer to the seller for part of the purchase price (commonly 10% to 25% on SBA-backed SMB deals). The buyer pays it back over 3 to 7 years with interest. The note's subordination, default, and acceleration terms decide whether the seller can pull the rug if anything goes wrong.
Why people get burned by this clause
SBA 7(a) lenders require seller notes to be on standby (no payments) for at least 24 months. If the note documents do not match SBA requirements, the loan can fall through at close.
What should make you slow down
- Note is not on full standby for the SBA-required period
- Cross-default with any other obligation
- Acceleration on minor covenant breach
- Seller has set-off rights against earnout or holdback
- Personal guarantee from buyer extends to spouse without homestead protection
Where you usually see it
- Asset purchase agreements (as exhibit)
- Promissory notes
- SBA loan packages
What the platform checks in the live contract
- Standby period and SBA compliance
- Default and cure periods
- Acceleration triggers
- Subordination to senior debt
- Personal guarantee scope and carve-outs
What stronger language usually looks like
- Full standby for SBA-required period (minimum 24 months on 7(a))
- 30-day cure period for any monetary default
- 60-day cure for non-monetary default
- Acceleration only on bankruptcy or material payment default
- Personal guarantee carves out homestead
Definitions worth opening next
Articles that go deeper
Seller note terms can erase the financial flexibility that justified the seller financing in the first place. SBA standby compliance is non-negotiable on 7(a) deals.
See how this clause behaves in the real contract.
The clause library gives you judgment. The full review shows how this clause combines with the rest of the agreement, then quotes the exact language, scores the risk, and explains what to push on next.