Seller financing
When the seller accepts part of the price over time rather than all cash at closing, effectively lending to the buyer.
In more detail
A seller note is common in smaller transactions. The seller receives a portion of the price at closing and the rest in payments over a few years, usually with interest. It bridges a gap between what a buyer can fund and what a seller wants, and it signals confidence in the business, which lenders notice. The risk is real: if the business struggles under new ownership, the note is what suffers.
For example
On a $2 million sale, the buyer pays $1.6 million at closing and the seller carries a $400,000 note over four years at interest.
If you are selling
Some flexibility on structure usually raises the total price and widens your buyer pool. Understand what happens if the buyer defaults.
If you are buying
It can close a funding gap and often signals the seller believes in the business, but the terms need to be sustainable from the business's cash flow.
Related terms
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