Balloon Loan
A balloon loan is a loan that includes a balloon payment at the end of the loan term. This large one-time balloon payment pays off the remaining balance on the loan.
In website sales involving seller financing, the buyer and seller could agree to and structure a balloon loan. In this arrangement, the buyer makes smaller payments (possibly interest-only payments) over the term of the loan and a balloon payment at the end of the term. This could be appropriate if the buyer is expected to sell the website by the end of the term and pay off the remaining debt owed to the seller.
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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