What is Seller Financing?
Banks and traditional lenders rarely ever lend money to business buyers. Without financing, buyers have to pay cash on the full asking price. This could be challenging especially in bigger dollar deals. As such, sellers often offer financing to buyers in order for the buyer to purchase their business. This usually applies to transactions over $100,000.
It works just like a real estate deal. The buyer makes a cash downpayment and pays the balance in monthly debt payments over time. The seller, thus, acts exactly like a bank and even charges interest on the balance.
So seller financing enables buyers to purchase high-dollar businesses. Well, another big benefit of providing seller financing is that the seller indicates to the buyer their long-term confidence in the business. In this way, the buyer can rest assured that the seller is not unloading a lousy business on the buyer and running off with their cash. The seller is still tied to the business because the business has to make the monthly debt payments. This added security makes buyers more comfortable and speeds up the business sale process.
The financing terms depend on the individuals involved. There are so many ways it can be structured. A good website broker will help structure the appropriate financing arrangement.
Contact Us today and we will structure your financing and sell your website business for you.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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