# Does standby time count toward the seller note refinance test?

**Short answer:** Probably not. A seller note can be refinanced after it has been in place and current for 36 months, and Appendix 15, Para. A.3.a, adds "not on standby." Appendix 15 governs if Appendix 14 conflicts. Confirm with your lender. Source: SOP 50 10 8.1, App. 15, Para. A.3.a.

Canonical page: https://www.sbaexpress.loans/answers/seller-note-standby-time-36-month-refinance-test/
Last checked: 2026-11-09

Probably not. Appendix 15, Para. A.3.a, of SOP 50 10 8.1 says the note must be current and adds "not on standby" in parentheses. Confirm with your lender how it applies the rule.

## What each passage says

Read plainly, months on full standby do not count under Para. A.3.a. Appendix 14 and Appendix 15, Para. C.2.a, omit those words. They say only that the debt can be refinanced after it has been in place and current for 36 months.

Two provisions point back to Para. A.3.a. Appendix 14, Para. A.1.g, sends readers to Appendix 15 for refinancing rules on change of ownership debt. The introduction to Appendix 15 says its rules govern a change of ownership if another SOP section conflicts.

## Why it matters

A note counted as equity must stay on full standby for the term of the 7(a) loan. If standby months do not count, that note cannot reach the test while it stays on standby. A note with scheduled payments can.

## The rest of the test

- The note arose from a change of ownership of a going concern.
- The new payment is at least 10% less than the existing installment amounts in aggregate.
- The refinance must not reduce the lender's exposure.
- Proceeds cannot pay a creditor in a position to sustain a loss (13 CFR § 120.201).

The prior SOP 50 10 8 used 24 months.

## Collateral carries over

The new loan must be secured with at least the same collateral and lien priority as the debt being refinanced (Appendix 15, Para. C.3.b). If the old debt is over-collateralized under SBA's rules and the new loan stays fully secured, the lender may release the excess.

## Sources

- [SOP 50 10 8.1, App. 15, Para. A.3.a (about p. 369)](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. 14, Para. A.1.g (p. 355)](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.a, Seller Debt (about p. 376)](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.3.b (about p. 382)](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 § 120.201](https://www.ecfr.gov/current/title-13/section-120.201)
- [SOP 50 10 8 (prior version), Sec. B, Ch. 1, Para. A.1, Debt Refinancing](https://legacy.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx)
- [SOP 50 10 8.1, App. 15, introduction (p. 362)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)