Seller financing in commercial business sales San Elijo Hills is where the seller is willing to personally finance part of the purchase price. In most cases, offering seller financing increases the likelihood of selling a business and also helps sell at a much higher profit. However, while it is tempting to offer seller financing, there are a few serious considerations that have to be made. Here are the dos and don’ts of seller financing.

Do assess the risks

The first fact you need to understand about seller financing is that you will be tied to your business long after the sale is complete. You will not be able to walk away. The new owner will continue paying you principal with interest if the business continues to succeed. If the new owner fails, you will suffer the loss of interest income as well as other costs. If you are considering seller financing in commercial business sales San Elijo Hills, you have to evaluate your business as an investment. There is a certain level of risk involved. It is always wise to consult a business broker to help with risk assessment.

Don’t waive the down payment

To further reduce the risk that comes with seller financing, you have to ask for a substantial down payment. A down payment minimizes your exposure by equally distributing the risk between the buyer and the owner. It also helps ascertain you are dealing with a serious buyer. As a seller, you should finance between 20 and 50 percent of the total sale price.

Do charge interest

The best thing about offering seller financing is that you will be able to charge an interest on the money you lend buyers. Charging an interest will allow you to reap significant benefits from seller financing. Your ability to charge interest will help you increase the final selling price of your business. When priced properly and the right interest charged, you stand to sell your business at a price that is 15 percent higher than with a cash sale.

Don’t do it yourself

A common mistake business owners make when offering seller financing is doing everything on their own without leveraging the services of professionals. When this happens, there is a higher risk of mistakes especially when it comes to the terms in the promissory note. Involving a business broker in San Diego throughout the sale will increase chances of achieving success.

While seller financing is gaining more popularity in commercial business sales San Elijo Hills, it is important to note that it is not as straightforward as you may think. You need to get the help of professionals in order to get everything right the first time. Never ignore the importance of working with a business broker.

Commercial Business Sales San Elijo Hills