The 24-month seller-note seasoning rule
Last updated
Quick Answer
A seller note must have been in place and current, and not on standby, for 24 months after the change of ownership before it can be refinanced.1
What it is
The seasoning requirement in SOP 50 10 Version 8 is that a seller note has been in place and current — explicitly not on standby — for at least twenty-four months following the change of ownership in order to be refinanceable.1
Operational context
What good looks like
Why It Matters
It interacts directly with the full-standby rule, and the interaction is worth planning around. A note structured on standby to count toward the injection is by definition not accruing the seasoning that would let you refinance it later. Two rules that are each reasonable in isolation combine into a note you cannot move for years.1
Term Family
Related concepts
Frequently Asked Questions
What is The 24-month seller-note seasoning rule in venture capital?
The seasoning requirement in SOP 50 10 Version 8 is that a seller note has been in place and current — explicitly not on standby — for at least twenty-four months following the change of ownership in order to be refinanceable.
Why is The 24-month seller-note seasoning rule important for startups?
Understanding The 24-month seller-note seasoning rule is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.A1-06 — SBA SOP 50 10 Version 8, eff. 2025-06-01 (.docx)SBA SOP 50 10 Version 8, eff. 2025-06-01 (.docx)Gov / statistical primary(A seller note must have been in place and current, and not on standby, for 24 months after the change of ownership before it can be refinanced.)primary · A1 · operating-compliance · rule
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