Business seller financing: What are the benefits for each party?

On Behalf of | Jun 18, 2022 | Real Estate & Development

When business owners decide to sell their companies, they may face certain problems that make that sale difficult, such as a potential buyer’s inability to raise the total cost all at once. Seller financing can eliminate this issue, and according to Lending Tree, offering financing can increase the number of buyers interested in a business and give the seller greater flexibility when it comes to making that sale.

Seller financing also offers benefits for each party during and after the sale, no matter the size or nature of the business.

Benefits for the seller

When business owners decide to sell a company, financing can provide them with several circumstances that may improve their position. Not only can financing draw a greater number of interested buyers, but it can also allow greater sales flexibility, including:

  • Control over the financing percentage
  • Control over setting a down payment, if applicable
  • Creating beneficial terms and conditions for both parties

Sellers can also create flexible financing terms with the buyer, which may strengthen the buyer-seller relationship and give the seller a greater feeling of confidence during the sale process.

Benefits for the buyer

While seller financing can offer business sellers greater control, buyers may also benefit because it can provide them with more flexible spending when compared to buying a business in one lump sum. It may especially benefit those who own a small business and wish to expand without having to borrow against property or profits they already possess. When sellers make financing payments reasonable and keep interest percentages low, buyers can make use of the new venture and put its profits into both businesses equally.

Both buyers and sellers may want to ensure they each have a vested interest in a sale. This does not give one too much power over the other.