In seller financing, the seller lends part of the purchase price and the buyer pays it back over time.
How seller financing works
The buyer pays most of the price at closing and signs a promissory note for the rest, repaid monthly with interest. The note is usually secured against the business assets.
Common terms
- Financed share: often 10% to 40% of the price
- Term: commonly 12 to 36 months
- Interest: agreed between the parties
- Security: a lien on the assets and the right to take them back on default
Why sellers agree to it
It widens the buyer pool, can support a higher price and shows confidence in the business.
Why buyers want it
Less cash up front and a seller who stays invested in a smooth handover.
Protect both sides
- Put the note, security and default terms in writing, reviewed by a lawyer
- Keep the domain or key accounts in escrow until a set amount is paid
- Agree reporting: the seller may want monthly revenue updates until the note is repaid
Seller financing structures price; it should not disguise an inflated one. Check the value first with the business valuation calculator.