Seller guide No. 11
Seller guide No. 11
Seller financing means you, the owner, let the buyer pay part of the price over time, with interest, under a signed note. BizBuySell's Q2 2026 report found 90% of buyers expect seller financing to play a part, while only 29% of owners plan to offer it.
Last updated: October 18, 2026
Dee started Ridgeline Lawn and Tree with one truck and a borrowed mower. Twenty-two years later it has three crews, four hundred weekly clients, and an owner who would like to see her grandkids on a Tuesday.
Her first serious buyer is Tom, her longtime crew lead. He knows every route. What he does not have is the whole price in cash. Neither do most buyers.
Dee, Tom and Ridgeline are made up. The way they work it out is how seller financing usually works.
Chapter 1
Tom asks Dee the question most owners hear sooner or later: "Would you carry part of it?" Her first instinct is no. She wants her money and to be done.
Seller financing means you, the owner, let the buyer pay part of the price over time, with interest, under a signed note. In the same report almost half of owners said they will not offer it at all, and another 23% were undecided.
That gap is a chance. Offering it means more buyers can afford your business. It also shows you believe the earnings are real, because part of your payout depends on them.
Chapter 2
Dee's accountant walks her through the usual pieces. It is less mysterious than she expected. It is a loan, and she is the bank.
Payments are usually monthly, out of what the business earns, starting after closing unless the note is on standby.
Paid at closing. In an SBA deal the buyer puts in at least 10%. Owners financing alone often want 50% or more (Morgan & Westfield).
You lend the rest, or a slice. Seller notes are often 10% to 40% of the price (Morgan & Westfield).
Five years on average, from three to seven (Morgan & Westfield).
Rates on seller notes have ranged from 6% to 8% (Morgan & Westfield). You and the buyer agree it.
Chapter 3
Example only, with made-up numbers. Ridgeline sells for $200,000. Tom pays $40,000 down, which is 20%, and Dee carries a note for $160,000 at 8% over 5 years.
Every month Tom pays Dee about $3,240. Over the full term that is about $194,400, of which about $34,400 is interest she would not have earned on a cash sale.
Before saying yes, Dee checks one thing: does the monthly payment fit comfortably inside what the business really earns? If it does not, the note is a risk for both of them.
| Down payment | Paid at closing | You finance | Buyer pays you |
|---|---|---|---|
| 10% | $20,000 | $180,000 | $3,650 a month |
| 20% | $40,000 | $160,000 | $3,240 a month |
| 30% | $60,000 | $140,000 | $2,840 a month |
Worked example, not a market rate: 8% interest over 5 years, standard monthly amortization. The buyer and the owner set their own terms.
Chapter 4
Tom's bank suggests an SBA 7(a) loan instead. In this second made-up example the price is $400,000, and for simplicity that is the whole project cost.
The bank needs a 10% injection, $40,000. Tom puts in $20,000 cash, and Dee carries a $20,000 note to cover the other half. The bank lends $360,000. Dee gets about $380,000 at closing, before her own costs.
The catch is standby. Under SBA SOP 50 10, a seller note can count toward up to half of the buyer's injection only if it is on full standby, meaning no payments to you for the life of the SBA loan. The bank gets paid first.
So a standby note is money you wait for. Ask the buyer's lender early how they will treat your note. SBA revises these rules, so confirm the current version.
Chapter 5
It is the question that kept Dee up at night. Her attorney's answer: you do not rely on trust. You rely on the paperwork.
The buyer has money at stake.
The buyer is personally on the hook, not just the company.
A filed claim on the business assets if payments stop.
What counts as missed, the grace period, late fees, next steps.
Regular financial statements, so you see trouble early.
No selling assets or taking on new debt until you are paid.
Chapter 6
Dee and Tom shake hands, then hand it to their attorneys. Three documents later, Ridgeline has a new owner and Dee has a check every month.
A seller-financed sale needs a promissory note and a security agreement, and often a personal guarantee. These are legal documents. Have your own licensed attorney draft or review them.
YourBizWorth is not a lawyer, a broker or a lender. This guide explains how seller financing usually works so you can ask good questions. It is not legal, tax or lending advice.
YourBizWorth is not a broker, appraiser, or law firm. This guide is general information, not legal, tax, or lending advice.
Enough that the buyer has real money at stake and you get the cash you need. In an SBA deal the buyer must inject at least 10% of project cost. In a deal you finance alone, Morgan & Westfield says many sellers want 50% or more.
You and the buyer agree it. Morgan & Westfield reports rates on seller notes have ranged from 6% to 8%. Your attorney or accountant can tell you about any minimum rate rules for your situation.
That depends on your signed documents. A secured note with a personal guarantee usually gives you a claim on the business assets and on the buyer personally. Default terms spell out the steps.
You receive no payments on it while the SBA loan is outstanding. Under SBA rules, that is the condition for a seller note to count toward the buyer's required injection.