Why You Should Offer Seller Financing
When it comes to commercial business sales Laguna Hills there are so many options you will be presented with as a buyer. Our work at So-Cal Business Brokers is to walk you through the different financing options and find the optimal one for your unique situation. Some of the options are well known such as paying cash and getting bank financing or working with private investors. There is, however, seller financing, which is alien to most people. Keep reading to know why we recommend it.
What is seller financing?
In commercial business sales Laguna Hills, seller financing is an option in which the business owner offers financing to the new buyer. It involves a short-term promissory note between the seller and the buyer. It involves a down payment and the balance being paid over a period of 3, 5 or 7 years based on the terms in the promissory note. To benefit you the seller, at So-Cal Business Brokers we insist on a down payment of not less than 40% of the total sale price. What is more is that we add an interest rate for the remaining balance. The interest is between 4 and 7 percent.
Why we recommend seller financing
Seller financing we benefit you, the seller, the most. It will help streamline the transactional process. The fact that you are offering seller financing will compel more buyers to come to you. Buyers prefer business that offer seller financing because the financial burden will be lessened and the seller will continue to have vested interest in the success of the business.
You should also note that offering seller financing in commercial business sales Laguna Hills helps you maintain a stronger position when asking for a better sale price. The option will also help you get a faster sale transaction process.
It is also good to note that seller financing will help you reap a higher return on your equity while deferring income tax. You will get regular additional income stemming from the accrued interest on the amount that the buyer owes. Additionally, since you will not be getting a huge lump sum of the money after the sale, you will enjoy tax deferment and you will not have to worry about being pushed into a high tax bracket.
The pros and cons of seller financing differ from the standpoint of the buyer to the seller. As you advisors, we will help you know when it is a good idea to offer seller financing and when you should consider other financing options.
Are you considering seller financing in commercial business sales Laguna Hills. Schedule a free consultation with us today. We will answer any question you might have and help with the sale of your business.