The basic structure
The seller accepts part of the purchase price over time, usually as a promissory note with interest, amortized over three to seven years. It commonly covers 10–30% of the price.
Why it matters to buyers
Seller financing reduces the cash needed at closing and keeps the seller invested in a smooth transition. Lenders often view a seller note favourably because it demonstrates confidence in the business.
What to negotiate
Interest rate, term, whether payments are deferred during transition, and whether any portion is contingent on customer retention or performance.
Frequently asked questions
- Is seller financing a red flag?
- The opposite, usually. A seller unwilling to carry any portion of the price may be signalling doubt about the durability of the earnings.
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