Provided by Credit Bench
Why is seller financing sometimes needed on business acquisition deals?
Answer from a lender perspective:
- Lack of buyer industry experience
- Lack of buyer business ownership experience
- Limited buyer liquidity for either down payment or post close cash
What are the advantages of seller financing to the seller:
- Maximizes selling price
- Sells business faster
- Great rate of return on money being held back
- Deferred taxes
What are the advantages of seller financing to the buyer:
- Buy a business that otherwise might be unattainable
- Gives reassurance that the seller is engaged and supports transaction
- Builds confidence that the due diligence information is legitimate
- Qualifies & closes transaction quicker
NEW SBA Procedural notice update:
- Seller debt may be considered part of the equity injection if it is on “full standby” for the first 24 months of the 7(a)-loan compared to the previous 10-year “full standby” requirement.
The Sunbelt Business Advisors Minneapolis office is the largest office in the Sunbelt network with a staff of over 50 advisors, associates, analysts, and business development representatives. In 2021 the firm was recognized by the International Business Brokers Association as the #1 firm in the country and the first firm in history to sweep all three first-in class awards. Sunbelt provides services to business owners interested in selling their businesses, assistance with merger and acquisition activities, complimentary business value assessments, and advice to business owners seeking to maximize their life’s work when they exit. The firm provides business brokerage and mergers & acquisitions services for companies with revenues from $500,000 to $150 million. More information is available at www.sunbeltmidwest.com (<Under $5 million revenue) and www.tnma.com ($5 – $150 million in revenue).