Should I Offer Seller Financing? Thoughts For Business Owners

Are you considering selling your business? In a perfect world every buyer would come to the table with an all-cash full price offer, but in reality we know that’s not going to be the case. 



Many small business buyers will qualify for loans like those from the SBA (Small Business Administration), but a far more common practice is seller financing.


Seller financing means a buyer pays a substantial down payment (typically more than half of the purchase price) and then you finance the rest for a specified interest rate and amount of time. If the buyer falters for some reason you get to keep your money and you get your business back.


Seller financing happens in a lot of small business transactions because it can be a very successful way to get a business deal done. From a buyer’s perspective it means the current owner is willing to keep some skin in the game – they know the business is in good shape and has a future (so they can get paid). It also means that a buyer will have the option to buy businesses that would otherwise be unaffordable. From a seller’s perspective seller financing acts as a marketing tool because, as previously mentioned, it means you are willing to bet on the future of the business. It also increases the pool of buyers who can now consider buying your business.  


Is it always a good idea to offer seller financing? It depends. If you are someone who just wants out and has no desire to have any attachment to your business after the sale, then maybe seller financing isn’t for you. If you are in a very hot industry that is currently attracting cash buyers then you might get away with not having a seller financing conversation at all. Even if you don’t love the idea of seller financing it’s typically a good idea overall to leave all financing options open when you list your business. You don’t want to miss out on a great buyer and a great return because you decided too soon to refuse a more creative financing deal. Keep that door open! 


Have you decided to sell your business but hadn’t yet considered offering seller financing? Did you buy your business using seller financing and have an experience to share? Please feel free to leave us questions or comments.




Michael Monnot


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Why Offering Seller Financing In A Booming Economy Is A Good Idea


If you are considering selling your business, then you probably know what a complicated process it is can be.


The best way to successfully maneuver the path to a closing table is to be very flexible, and this flexibility is pivotal when considering whether or not you should offer seller financing.


Sure, the economy is currently booming. If you were trying to sell your business back mid-recession, then offering seller financing was an absolute must as traditional lending disappeared and most buyers didn’t come with fist fulls of cash.


Now there are more cash buyers in the market than there have been in recent years, which is terrific news – but if you limit your buyer pool to only those with all-cash offers, you won’t be doing yourself any favors.




Flexibility. Not every business is right for every buyer, so limiting your pool of buyers right out of the gate may keep you from selling your business quickly (if at all). This is especially true if you have a niche business that will have a hard time attracting a huge number of buyers anyway.


Also, a seller who demands an all-cash offer typically gets only 70% of their asking price in the end, while a seller who is open to the idea of seller financing gets somewhere in the mid to high 80’s. Do you really want to miss out on 15% or more?


Increasing your buyer pool by offering seller financing as an option also means you may have the opportunity to choose from multiple buyers and multiple creative offers – thereby creating a chance to get the best return on your business you possibly can.


Yes, we would all love full-price, all-cash offers that land on our desk the day our business hits the market, but in reality a flexible seller is a seller who will actually make it to a closing table.


Talk to your business broker about what amount of seller financing they think would be appropriate and what you are comfortable offering. Listen with an open mind to any offers that come in from buyers who are asking you to finance part of the deal. In the end, it is still up to you whether you take an offer or not – just keep your options open throughout the process.


Are you considering offering seller financing for your business and want to know that the terms of a typical deal look like? Do you have more questions about how much of a deal you should finance? Ask us! Please leave any questions or comments and we will be happy to assist you.




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907


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Need Capital? Business Buyers & Seller Financing

Seller financing can make small business deals possible, as it allows buyers (who don’t have all the capital necessary or who are unable to raise funds through more traditional lending sources) the opportunity to buy a great business.




Our economy is in much better shape than it was during the recession, and as such the business market has changed. In the midst of the recession nearly all deals came with a fair share of seller financing as traditional lending was essentially nonexistent and any buyers in the market weren’t flush with cash. This was great news for buyers as they could consider businesses that would have otherwise been out of their range.


Now that the economy has dramatically improved, the tides of seller financing have turned.


First and foremost, the improved economy means there are more cash buyers coming to the table that will directly compete with those who need a seller financed deal. In terms of recently completed deals, seller financing still holds as a close second to cash, but now buyers need to come with at least 50% down if they hope to compete with other buyers and get a deal to closing. There are, of course, exceptions to this rule as every business deal is different – but the days of financing more than half of a transaction are probably gone for good.


It is also easier now than it was just a few years ago to get more traditional bank financing or a SBA (Small Business Administration) loan, but many financial institutions are still gun-shy about risky small business deals as the memories of the recession are still relatively fresh in everyone’s mind.


What if I can’t get a bank loan and the business that I’m interested in doesn’t qualify for a SBA loan? How can I get seller financing?


If you are interested in seller financing, let your business broker know as it will help in narrowing your purchase options. Your broker can look for business sellers who have indicated they would be open to a deal that includes some seller financing. Next, you need to be prepared to offer at least 50%, if not more, of the purchase price up front if you want any seller to take your seriously. No one is going to finance 100% of the deal or anything close to it.


Do you have more questions about financing options for the purchase of a small business? Would you like to know what the terms look like for a typical seller financed deal? Contact us today or leave us a comment or question here. We would be happy to help!




Michael Monnot

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907



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What You Should Know – Selling Your Business: Do I Have To Finance The Sale Of My Business?

Why Is Seller Financing So Important To The Sale Of My Business?


Surveys have shown that a seller, who asks for all cash, receives on average only 70 percent of their asking price, while sellers who accept terms receive on average 86 percent of their asking price.  That’s a difference of 16 percent!  In many cases, businesses that are listed for all cash just don’t sell.  With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases.  Most sellers are unaware of how much interest they can receive by financing the sale of their business.  In some cases, it can greatly increase the amount received.  And, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.


Are you considering selling your business but are hesitant to offer seller financing? Do you have questions about how seller financing would work? Please leave questions or comments here and we would be happy to help.




Michael Monnot



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Michael Monnot


9040 Town Center Parkway
Lakewood Ranch, FL 34202


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