Selling your business with buyer financing—often referred to as seller financing—involves you, the seller, providing a portion of the purchase price as a loan to the buyer. This method can broaden your pool of potential buyers, especially those who might not secure traditional bank loans. Essentially, the buyer makes an upfront down payment and then repays you over time with interest. For example, many arrangements require a down payment of 10-30% of the sale price with repayment terms that typically span 3-7 years.

In order to sell your business using buyer financing, it is vital to prepare comprehensive documentation. Begin by having a firm understanding of your business’s value and consult early with professionals such as attorneys and CPAs. You’ll need to draft a purchase and sale agreement, a bill of sale, and a detailed promissory note outlining the loan amount, interest rate, repayment schedule, and collateral. Establishing clear and legally sound terms protects both parties in the transaction. Additionally, advertising that the business sale includes seller financing can attract a wider range of qualified buyers.

There are significant benefits to this approach. Not only can seller financing help sell your business faster by increasing buyer interest, but it can also enhance the overall sale price—businesses sold via seller financing have been known to garner 20-30% more compared to those sold without such arrangements. At Iconic, our dedicated team and our structured 5-step comprehensive selling process ensure you are fully supported throughout the entire sale, keeping you informed and in control. To learn more about how to navigate complex transactions effectively, feel free to explore The Iconic Way or visit our Homepage for additional insights.

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• Seller financing deals often feature interest rates that are set slightly above those of traditional bank loans, helping to compensate for the additional risk you assume as the lender (source).

• This financing method may provide tax advantages through installment sale treatment, which can allow sellers to spread out capital gains and potentially lower their tax burden over time (source).

• Proper collateralization is critical—documenting detailed descriptions, locations, and any existing liens on business assets ensures you are adequately protected (source).

• Engaging with legal and financial professionals early in the process can help you prepare a comprehensive purchase agreement, promissory note, and bill of sale, ensuring your seller financing terms are legally sound (source).