The Ins and Outs of Seller Financing
With the myriad of questions and concerns that accompany your decision to sell your business, a major one is seller financing. Here at The Firm, we’re experts at helping sellers secure financing, so we are happy to offer insight.
What Is Seller Financing?
Seller financing — otherwise known as seller carryback, seller carry or owner financing — is a loan from the current business owner. While it could be a primary funding source, seller financing is typically used as a portion of capital stack to complete the deal. The business owner provides this loan to the buyer, and the buyer must make monthly payments to repay the loan in full.
Like any loan, seller financing accrues interest ranging anywhere from 5 to 10%, which the buyer is also responsible for.
Benefits to Sellers
Although it may seem like a risk, seller carry is extremely beneficial to both parties. For sellers, carryback:
- Attracts potential buyers
- Speeds up the closing timeline
- Offers more money
- Increases sale price
Benefits to Buyers
Seller financing is great for buyers because it:
- Allows for cheaper financing from outside sources
- Provides an additional funding resource
- Speeds up the closing timeline
- Fills financing gaps
Buying and selling a business is tough work, but at The Firm, we work to make it easy for both sides. We often suggest a standard 10% seller carryback as an effort of good faith. Through proper vetting and qualification processes, we help ensure that our seller’s money will be in good hands with a new owner.
- 2020 Industry Highs and Lows
- What the "Big Buyers" Want
- What’s an earnout, and why does Ryan Reynolds have one?
- M&A Advisor or Business Broker?
- How to Sell a Business in 7 Easy* Steps
- The Firm Advisors: #1 in the World -- Again!
- Documentation is Key During This Time
- Small Business Debt Relief Program
- Work On Your Small Business (While You Aren't Working In It)
- Meet the Listing: Body Shop w/ Towing & Auto Repair
- Superstitions and Deal Killers
- Choosing Your Investments: Stock Market vs. Business Purchase
- Video: Deal Education
- Industry Spotlight: Advertising and Marketing
- Meet the Team: The Firm Advisors Office Tour
- Securing Your Business Against Ransomware
- M&A: What's an M, and what's an A?
- Location, Location, Relocation
- $20M in One Month
- Pet Care: A Recession-Proof Industry
- The Firm Named to BBB Honor Roll
- Firm Family Christmas
- Firmgiving 2019
- Cortney Sells on IBBA's Podcast
- The Firm Makes Inc. 5000
- M&A: The Industry Defying Gravity
- Have You Met Makayla?
- Dr. Lemberg's Pathway to Retirement
- Steven Makes His Mark in M&A
- Hot Off the Press - June 2019 Magazine
- All Good Things Take Time
- The Firm June Magazine Release Celebration
- The Firm Feels Good Doing Good
- Corner Kick Spoils our Swan
- Opportunity of the Week: A Business That Brightens Children’s Futures
- Q&A With Cortney: Stock Sale Versus Asset Sale
- Preparing for the Perfect Retirement
- The Firm Is Breaking Industry Records & Poised for Growth in 2019
- Simply the Best
- Competitor Analysis, Opportunities Listed
- Dentist to Dreamer - Hard Work Pays Off!
- Kansas City Tech Company Useagility Sells to First Tek
- 8th Year as Omaha's Best Business Brokerage
- Sellers: Why You Should Finance Your Buyers
- Summer Intern 2017 - Ameya Shelby
- Industry Forecast: Mind the Generational Gap
- 8 Things We Wish Every Business Buyer Knew Before Calling Us
- Selling Your Business: Getting a Proper Business Valuation
- Asset Sales or Stock Sales: Determining the Best for Your Business Transaction
- Why (and How) Business Owners Are Selling in 2017
- The Law of 3's - Choosing the Right Kind of Broker
- A Mutually Beneficial Relationship
- Reaching Out is Key
- Confidential Business Reviews
- A Change of Pace to Business Ownership
- Confidentiality is at the Core of Business
- Moving into the Boardroom
- Buying a Business vs. Starting Your Own
- Bringing Buyers and Sellers Together is Just the Beginning
- Client Interfacing in the Digital Age
- Four Questions Every Buyer Should Ask
- The Firm Outpaces Transaction Totals from Previous Two Years
- Faces of Omaha 2016: Face of Business Brokerages
- The Firm Business Brokerage Set to Double Sales within Seller's Market - MBJ 2014