As is taught in training at VR Corporate for all franchisees, seller financing
can help sell a businesses
. Most sellers are entrepreneurial like your past and present clients, selling one business to invest in another.
You can bring both buyers and seller together to close a deal through seller financing. This can help you in a variety of circumstances where obtaining capital from lenders can be difficult in this economy.
Benefits of Seller Financing
The major advantages to using seller financing include:
- Buyer and Seller savings in closing costs;
- Ability to negotiate the interest rate, repayment schedule and other loan conditions;
- Requesting special conditions of the purchase like inventory, furniture, fixtures and expenditures;
- Seller receiving a higher yield on investment through equity with interest.
By assisting in helping an entrepreneur buy a business
, the seller could obtain a higher selling price as compensation.
Using Promissory Notes in Seller Financing
Inevitably, the majority of sellers that have their deal tied in seller financing will need the capital down the road to invest in another endeavor. This is where a promissory note comes in handy. First of all, the promissory note created when a seller's financing the sale of the business is a sellable asset that can be liquidated in a variety of ways. This can help the seller receive the cash they need at the moment instead of sitting on years of smaller monthly payments.
In many cases, assisting in the sale of the soon-to-be-created promissory note can be the difference between a closed transaction and the one that falls through.
Drawing New Buyer Leads from Past Clients that Used Seller Financing
Remember a seller with cash that has worked with you previously can very well be your next buyer. When you push seller financing in your engagements, this will lead to more closings; and more commissions in your pocket.