Reason #5
Seller Financing – Unlike in real estate where Seller’s and real estate agents look at you like you’re from another planet when you bring up Seller financing, when buying a business it’s very customary and not out of the ordinary to request and get Seller financing.
Matter of fact, it could be a potential red flag when a Seller won’t offer financing. But Seller financing is usually pretty easy to negotiate, especially if you’re bringing a lot of other influencers to the table (experience, down payment, a business or marketing plan).
Owner-financed sales are nothing new—75 percent of all small-business sales involve some amount of seller financing—but traditional and Small Business Administration lenders now want a greater hedge on their bet.
Seller-financed transactions are especially common when a cash sale or traditional lending is difficult to come by, and the business doesn’t meet requirements for a venture capital investment. Without the typical intermediaries, flexible terms (payment schedule, loan period, interest rate, etc.) can be worked out based on the unique circumstances of the sale.