In commercial business sales San Diego Country Estates, you may hear your business broker or potential buyer talk about seller financing? What is it? Seller-financed business sales are becoming more and more popular today. They are beneficial for both buyers and sellers. As a seller, offering financing will help you achieve a quick sale as well as get more bids from potential buyers. It offers buyers an incentive to buy your business. But what exactly is seller financing?
Portion of the business is paid off over a specified period of time
It is the same as a bank loan
With seller financing, the loan terms are usually similar to those offered by banks. The interest rate that is charged is either lower or the same as the one offered by banks. Seller financing can finance a third or more of the total sale price. The buyer will be required to make a monthly payment to the seller. The payments start coming in a month from the date the sale is signed. This is unless there are seasonal sales fluctuations that affect the ability of the buyer to make payments. In this case there will be terms to reflect this.
Sellers have vested interests in the success of the business
One of the reason buyers ask for seller financing is because the business owner will remain vested in the business long after the sale is concluded. Offering seller financing communicates to buyers that the owner has confidence in the business’ long-term profit. If the business fails, the buyer will not be able to pay off the loan. Moreover, it is good to note that banks look at seller financing as buyer equity. This means they will be willing to lend you more money in seller-financed business-for-sale transactions.
There are numerous benefits that come with offering seller financing in commercial business sales San Diego Country Estates. It is, however, wise to discuss your options with an experienced business broker in San Diego before offering seller financing. The broker will let you know if the option is ideal for your type of business or not.