{"id":561069,"date":"2012-06-27T03:03:26","date_gmt":"2012-06-27T07:03:26","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbgreenbay\/seller-financing-it-makes-dollars-sense\/"},"modified":"2022-01-31T12:44:39","modified_gmt":"2022-01-31T17:44:39","slug":"seller-financing-it-makes-dollars-sense","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/seller-financing-it-makes-dollars-sense\/","title":{"rendered":"Seller Financing: It Makes Dollars and Sense"},"content":{"rendered":"<div>\n<p>When contemplating the sale of a business, an important option to consider is seller financing. Many potential buyers don&#8217;t have the necessary capital or lender resources to pay cash. Even if they do, they are often reluctant to put such a hefty sum of cash into what, for them, is a new and untried venture.<\/p>\n<p>Why the hesitation? The typical buyer feels that, if the business is really all that it&#8217;s &#8220;advertised&#8221; to be, it should pay for itself. Buyers often interpret the seller&#8217;s insistence on all cash as a lack of confidence&#8211;in the business, in the buyer&#8217;s chances to succeed, or both.<\/p>\n<p>The buyer&#8217;s interpretation has some basis in fact. The primary reason sellers shy away from offering terms is their fear that the buyer will be unsuccessful. If the buyer should cease payments&#8211;for any reason&#8211;the seller would be forced either to take back the business or forfeit the balance of the note.<\/p>\n<p>The seller who operates under the influence of this fear should take a hard look at the upside of seller financing. Statistics show that sellers receive a significantly higher purchase price if they decide to accept terms. On average, a seller who sells for all cash receives approximately 70 percent of the asking price. This adds up to approximately 16 percent difference on a business listed for $150,000, meaning that the seller who is willing to accept terms will receive approximately $24,000 more than the seller who is asking for all cash.<\/p>\n<p>Even with these compelling reasons to accept terms, sellers may still be reluctant. Selling a business can be perceived as a once-in-a-lifetime opportunity to hit the cash jackpot. Therefore, it is important to note that seller financing has advantages that, in many instances, far outweigh the immediate satisfaction of cash-in-hand.<\/p>\n<ul>\n<li>\u00a0Seller financing greatly increases the chances that the business will sell.<\/li>\n<li>The seller offering terms will command a much higher price.<\/li>\n<li>The interest on a seller-financed deal will add significantly to the actual selling price. (For example, a seller carry-back note at eight percent carried over nine years will double the amount carried. Over a nine-year period, $100,000 at eight percent will result in the seller receiving $200,000.)<\/li>\n<li>With interest rates currently the lowest in years, sellers can get a much higher rate from a buyer than they can get from any financial institution.<\/li>\n<li>The tax consequences of accepting terms can be much more advantageous than those of an all-cash sale.<\/li>\n<li>Financing the sale helps assure the success of both the sale and the business, since the buyer will perceive the offer of terms as a vote of confidence.<\/li>\n<\/ul>\n<p>Obviously, there are no guarantees that the buyer will be sucessful in operating the business. However, it is well to note that, in most transactions, buyers are putting a substantial amount of personal cash on the line&#8211;in many cases, their entire capital. Although this investment doesn&#8217;t insure success, it does mean that the buyer will work hard to support such a commitment.<\/p>\n<p>There are many ways to structure the seller-financed sale that make sense for both buyer and seller. Creative financing is an area where your business broker professional can be of help. He or she can recommend a variety of payment plans that, in many cases, can mean the difference between a successful transaction and one that is not. Serious sellers owe it to themselves to consider financing the sale. By lending a helping hand to buyers, they will, in most cases, be helping themselves as well.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>When contemplating the sale of a business, an important option to consider is seller financing. Many potential buyers don&#8217;t have the necessary capital or lender resources to pay cash. Even if they do, they are often reluctant to put such a hefty sum of cash into what, for them, is a new and untried venture. [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-561069","post","type-post","status-publish","format-standard","hentry","category-selling-a-business"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/561069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/comments?post=561069"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/posts\/561069\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/media?parent=561069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/categories?post=561069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbgreenbay\/wp-json\/wp\/v2\/tags?post=561069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}