A Friday thought - 100% seller financing?

by a searcher from University of Virginia-Darden - Darden School of Business

Apr 07,2023

As we all talk about SBA and bank lenders, I'm just curious, has anyone ever had or heard of a 100% seller note? What would be pros / cons / etc. Not actually happening - I'm just curious.  This would be as if the seller is financing the sale in the role of the bank.

Thanks

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6 comments

intermediary from Georgetown University - The McDonough School of Business

I see it happen in turnaround/restructuring scenarios. When it is not that scenario, however, as an advisor I would tell the buyer that my client could sell the business to his/her employees with a lot less risk.

04/10/2023 | like reply | 0 likes

professional from Villanova University - Villanova School of Business

Yes, especially if the seller is creative and an investor themselves, they might be interested in this. It may be a way to liquidate, receive a portion of the sale price in cash like stated above and then be able to maintain a return on their money without having to find somewhere else to put it provided that the percentage return on the seller's loan is comparable to or above market rates.

04/10/2023 | like reply | 0 likes

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