Should I Offer Seller Financing When I Sell My Business?
Offering to carry part of the price brings in more buyers and usually a better price. It also means part of your money depends on the buyer running the business well.
Request a Confidential Business Valuation · (786) 914-1017
How It Works
The buyer pays most of the price at closing and signs a promissory note for the rest, repaid with interest over an agreed term. Notes of ten to thirty percent of the price over three to five years are common on small businesses. The note is usually secured by the business's assets and personally guaranteed by the buyer.
Why Sellers Offer It
A buyer who needs less cash is easier to find, and a seller who carries a note is telling buyers and lenders that they believe the earnings. Listings that offer seller financing tend to attract more serious inquiries, and sellers can often hold a higher price in exchange for the terms.
Seller Notes and SBA Loans
An SBA lender may count a seller note towards the buyer's equity injection, but only on its terms, which can include a period during which the note is not paid at all. Those rules change, so the lender's requirements are confirmed before the letter of intent fixes the terms.
Protecting Yourself
Screen the buyer's experience and liquidity, not only their down payment. Secure the note with a lien on the assets, require a personal guarantee and life insurance, and keep the right to financial reporting. Your attorney should draft the note and security documents.
Request a Confidential Business Valuation
Tell us the type of business, the city, how long it has operated, annual revenue, owner benefit or seller's discretionary earnings, EBITDA if you track it, monthly rent and lease expiry, number of employees, how involved you are, why you are selling, your timeline and whether you would consider seller financing. A licensed BreakThru business broker prepares a confidential valuation from comparable sales and replies within one business day. Everything you tell us is confidential, the valuation is free, and nothing is listed or announced unless you decide to sell. Prefer to talk now? Call (786) 914-1017.
Questions Owners Ask
- How much is my business worth?
- Most owner-operated businesses in South Florida sell for a multiple of seller's discretionary earnings: net profit plus the owner's salary, benefits and one-time or personal expenses run through the business. Where the multiple falls depends on the industry, the lease, the staff, the trend in the numbers and how much the business depends on you. A confidential valuation gives you the range for your business and the reasons behind it.
- Will my employees, customers or landlord find out?
- Not from us. The business is marketed without its name or address, buyers sign a non-disclosure agreement and prove their funds before they learn who you are, and showings happen after hours or are presented as something else. The landlord is approached only once there is an accepted offer, because the lease has to be assigned.
- How long does it take to sell a business?
- Six to nine months from listing to closing is common for a well-prepared small business, faster when the price is right and the records are clean, longer for businesses that need a licensed buyer or a franchisor's approval. The escrow period after an accepted offer is usually sixty to ninety days.
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