Even in a great economy, banks have never been big fans of lending money to individuals for the purchase of a small business, so what makes the business world work is seller financing.

Many business sellers shy away from financing a part of their business sale, instead hoping for the elusive all-cash buyer, but this can be a big mistake.

Why?

It can be incredibly hard to get third-party financing for buying a business, and all-cash buyers are extremely few and far between. If a business seller refuses to offer seller financing, they are slamming the door on a large number of potential business buyers. The key to success in the sale of your business is to offer to finance part of the transaction.

Two-Fold Benefits

Seller financing can be a great selling tool because it opens your business to many more potential buyers than you would have attracted otherwise. Listing your business as one that will offer seller financing will generate more activity and will put your business ahead of others who are not offering financing. Using this approach will open your business to a much bigger pool of buyers.

The other way that seller financing benefits your business listing is that it is an attractive deal term for buyers.  By offering financing, you are expressing your belief in your business and its success over the long term, something that buyers will like to see. It is a key component of closing a deal.

What would seller financing look like for me?

The terms you will offer will depend on considerations of rate, length of term, and the amount you are willing to finance. Terms typically range from one to five years, but it varies greatly. You and your business broker will consider what percentage of the total price you are comfortable with, and what realistic terms would be.

What if I really don’t want to offer financing?

Ultimately, this will be a big mistake. You will drive away buyers, and your business will not generate the activity it could on the market. Instead, try to be open-minded, and perhaps list your business as one where seller financing may be negotiable.

The success of any business sale depends on attracting the right buyer, so do your business and yourself a favor and be ready to offer seller financing.

Do you have questions or concerns about seller financing? Please feel free to leave a comment or question here, and we will get you the answers you need.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com