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Pros of Seller Financing: Getting More For Your Business

August 16, 2012

As baby boomers begin to hit retirement age, many who are business owners are ready to sell. It’s created a market that has many businesses for sale. At the same time, concerns about the economy had made it tough to get financing for many potential deals. Seller financing is one option that could be the solution to get many deals done.

There are a number of benefits for business owners who are considering seller financing:

  • Faster sale – Seller financing provides an attractive option for buyers which means that sellers can sell their business quickly.
  • Flexibility – Seller financing enables the seller to create a payment schedule, interest rates and loan period that fit their personal needs. 
  • Tax breaks – Taking a note for part of the business purchase price may provide a tax break for the seller. The seller can defer some of the tax due on the sale of the business until full payment is received, which could be several years down the road.
  • Protections – Asking the new owner to keep the seller up to date with information like monthly profit and loss statements, workforce numbers, order backlog, inventory levels or other items with the monthly payment can be in the sale contract. The additional information allows the seller to keep track of the business and step in to offer advice or help if any problems are detected. 
  • In First Position to Be Paid:  If SBA is not in the picture you are in 1st position if there would be a default.  We encourage a personal guarantee from the buyer to ensure you being paid.

Working with a qualified business transaction professional, like a Certified Business Broker (CBI) or Mergers & Acquisitions Master Intermediary (M&AMI) is also recommended. Certified brokers and intermediaries at Sunbelt BC Business Brokers can provide the guidance you’re looking for when considering seller financing or other financing options.
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