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What are the advantages and disadvantages of buying a business with seller financing? Notes?

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Answers (3)
Satish Patel
Sunbelt Business Advisors
Middlesex County, MA
Premium Broker

Seller notes have become much more common in today’s lending environment. The simplified answer to a complicated questions is that a seller note does not require bank approval and is not likely to hold up the closing. The disadvantages are that if you default the seller is in a position to take over the business and you loose the business and your down payment. Please call me at 617-945-5338 or email me at

Mariola Andoni, CBI
Sunbelt Business Sales & Acquisitions

Aug 5, 2009
Kathryne Pusch
ConsultKAP Inc./Business Brokers Network

As always, deal structure is unique for each buyer-seller situation. In today's tight lending market, seller financing often "saves the day" and the deal! But, the "numbers" have to work for both parties. Deal terms must be structured to allow the buyer to make the debt service and the seller to clear any existing liens/loans with cash and get a relatively assured stream of payments. Professional representation often helps to allow the seller to understand the pros & cons and get comfortable with this structure. Seller financing often gives the buyer the sense of security he needs to feel confident enough to accept risk and move ahead with the deal.

Jul 21, 2009
Salvatore B. Urso
Florida Business Acquisitions, Co.


If you are the buyer, it is very advantageous. To name a few key points- 1. may be less expensive; 2. shows that the Seller has confidence in the business and buyer; 3. He has "skin in the game;" 4. speed to get the deal done. The SBA take a long time and makes you jump through many hoops.

Be Very careful, HOWEVER!!! I've seen deals where the Seller over prices the biz, and the only way to get it done is w/ Seller financing. Also, when the bank is involved they will scrutinize it more, so the bad deals have a better chance of getting killed before they do some damage (to you)... bottom line, don't go at it alone. Make sure a professional is helping you analyze the company.

Jul 21, 2009