# Can the seller carry back part of the price in a 504 deal?

**Short answer:** Yes. Seller financing must be subordinate to the 504 loan, and you cannot prepay it without SBA's prior written consent (13 CFR § 120.923). If it is part of your contribution, the Certified Development Company (CDC) must obtain an appraisal.

Canonical page: https://www.sbaexpress.loans/answers/sba-504-seller-financing/
Last checked: 2026-11-08

Yes, on SBA's terms. 13 CFR § 120.923(a) says financing from the seller of project property must be subordinate to the 504 loan.

## The rules

- The seller note must be subordinate to the 504 loan (SOP 50 10 8.1, Sec. C, Ch. 1, Para. E.1.s; Para. E begins p. 242).
- You cannot prepay it without SBA's prior written consent (13 CFR § 120.923(c)).
- A standby agreement may apply. A CDC may use SBA Form 155 or its own equivalent (Sec. C, Ch. 2, Para. A).

## If the note is part of your contribution

A borrowed contribution must be subordinate to the third party loan and the 504 debenture. If project property secures it, you cannot repay it faster than the 504 loan without SBA's written approval (Para. E.1.e; 13 CFR § 120.912).

The seller note also triggers an appraisal, even when the property is worth $500,000 or less. The appraisal must go to SBA with the application (Para. E.2.b).

## If the third party lender is the seller

The third party loan must be subordinate to the 504 loan, with three exceptions. The borrower assumes an existing note. The FDIC has carry-back financing. Or the property is a regulated lender's other real estate owned, with enough value to support the 504 loan (Para. E.2.a; 13 CFR § 120.923).

## Compared with 7(a)

A 7(a) change of ownership has its own rule for seller debt used as equity. It needs full standby for the term of the 7(a) loan, with no payments of principal or interest. Source: SOP App. 15, Para. C.2.

## Sources

- [SOP 50 10 8.1, Sec. C, Ch. 1, Para. E.1 (p. 242)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. C, Ch. 1, Para. E.2 (Para. E begins p. 242)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. C, Ch. 2, Para. A (p. 265)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. C.2 (Para. C begins p. 371)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.912](https://www.ecfr.gov/current/title-13/section-120.912)
- [13 CFR § 120.923](https://www.ecfr.gov/current/title-13/section-120.923)