Seller Financing
When you, the seller, lend the buyer part of the purchase price — common in small-business deals, and not always optional.
Seller financing is exactly what it sounds like: instead of receiving 100% of the purchase price in cash at closing, you finance part of the deal yourself by accepting a promissory note from the buyer. They pay you back over time, usually with interest, typically over 3–7 years. Seller financing is most common in deals under $5M, especially SBA-financed acquisitions, where lenders frequently require the seller to leave 5%–20% of the deal in a seller note as a way to keep the seller invested in the business's success post-close. In larger deals, seller financing is less common but not unheard of, often used to bridge a valuation gap when the buyer can't quite reach the seller's number.
Seller financing is sometimes leverage and sometimes a trap. For SBA-financed deals it's often required by the lender. For non-SBA deals, it's whatever the buyer can convince the seller to accept.
Buyers love seller financing because it lowers their cash requirement and lets them buy a bigger business than their actual capital would otherwise support.
Find out what a buyer would see in your business — before you talk to one.
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