Seller Financing

photo_biz16Seller financing is frequently used to facilitate the completion of transactions that cannot be financed by a lender alone. In some cases, like in a tight-credit economy, it may be the only way to purchase a business. The most common option for seller financing involves secured notes, but other options exist, including: unsecured notes, structured sales, assumption of the seller’s guaranteed credit, assumption of capital leases, a real estate lease, earnouts, notes on capital equipment and more.

Several distinct advantages associated with seller financing include:

  1. a faster sale for you and the seller

  2. a better price for the seller

  3. a higher degree of flexibility in the terms of the loan for you

  4. tax break incentives for the seller

  5. a decrease in your exposure to business risk

  6. a greater level of “comfort” about the deal for you

The business broker representing the business you are considering to purchase will know if the owner will provide seller financing, will consider an earnout, or will entertain other creative financing solutions. Based on your available capital, industry experience, and credit capacity, the business broker should be able to give you an idea of your financing options and put you in contact with various lenders who provide SBA Loans for business acquisitions if seller financing is not an option the seller will consider.