Seller Financing Friendly Banks in New York

November 09, 2023

by a searcher from Concordia University in New York, USA

Does anyone have a bank they've worked with in conjunction with seller financing when acquiring a business?

From my understanding, it's nearly impossible for SBA loans and Seller Financing to mix well, so finding the right bank to provide the debt financing is key.

Any good banks out there?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I know I responded in an email directly to you on these questions, but I also wanted to respond here for the rest of the community. (1) the SBA dictates the seller financing has to be over the same term as the SBA loan, which is longer than traditional seller financing, - The SBA Standard Operating Procedure does not specify the terms for seller debt. Many lenders do not want the seller note repaid quicker than the SBA debt and the SBA has issued guidance that they prefer this not to be the case but it is not a hard SBA rule. We have done plenty of deals where the seller debt is on a short amortization or where it is on a 10-year amortization but it balloons at year 4 or 5 with the remaining due then. (2) seller financing is put on a 2-year standby, and - The seller financing does not need to be put on a 2-year stand by. A 2-year standby is only required if that seller financing is going to be part of the equity down on the transaction in lieu of buyer equity. (3) the SBA loan takes the first lien position on all business assets. - Yes, the SBA does take a first lien on all business assets and any seller financing must be fully subordinated to the SBA lender. That part is non-negotiable under the SBA loan programs.

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Jacob, we have relationships in the NY area and would love the chance to assist you. However, I am a bit confused about your comment about SBA loans and seller financing not working well together? We see seller financing used in a majority of the SBA loans we do and the SBA and SBA lenders are very acceptable of the use of seller notes. In fact it usually lessens the Bank's risk position quite a bit and many SBA lenders prefer to have some sort of minimum seller note on a deal. I would be more than happy to talk about strategies for seller notes if you like. You can also reach me in general for financing options here or at redacted Good luck.

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