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As a business seller, will I need to finance a portion of sale amount?

Seller Financing of the sale of small to medium-sized business has always been important. Today’s lending environment makes having some form of owner financing even more important. Lenders are becoming increasingly reluctant to finance business purchases for several reasons. The first reason is that many small businesses attempt to minimize profits shown on financial statements in an effort to reduce tax liability. Second, a lender lacks the ability to takeover management of a business in the event of a foreclosure. These factors explain why over ninety percent of business purchases involve some degree of owner financing. Lenders are particularly fond of seller financing because it helps to demonstrate that the seller has continued faith in both the new owner and the future prospects of the company.