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Loading... Jul 26, 2021 · Learn what a seller note is, how it works, and why it is used in small business transactions. A seller note is a form of financing where a seller agrees to receive part of the purchase price in debt payments over time.
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What is a Seller Note? A seller note (commonly called seller financing) is a type of financing arrangement where the seller of a business provides some or all of the financing in the deal.
One of the simplest ways to finance the acquisition of a business is to work with the seller to negotiate some form of seller financing, which is called a “seller note.” The vast majority of small business sales — 80%, according to industry statistics — include some form of seller financing.
- $700,000
- $1,000,000
- $300,000
- 2 years
Nov 1, 2023 · Financing. Unlike SBA loans, seller notes can be structured in many different ways. This post breaks down common ways to negotiate a seller note to buy a business, including interest-only, balloon payments and stand-by clauses.
A seller note is designed to bridge the gap between the purchase price and the financeable asset base of the company being purchased. SBA loans may permit the borrower to include some or all of the seller’s note when calculating the borrower’s capital contribution to the transaction.
Jun 20, 2024 · Seller financing of a business purchase requires at least two important contracts: A purchase agreement defining what you’re selling to whom and for what price. A promissory note establishing the amount of the loan and repayment terms.
Jan 20, 2024 · Seller notes are a form of financing provided on behalf of the business owner selling their business to make the transaction more feasible for the vast majority of buyers. This structure also ensures the business owner who sells the company has “skin in the game” post-sale, versus walking off into the sunset to never be heard from again.
