I am looking at buying a business where the seller is offering 30% owner financing. How is this typically structured? What are the standard variables and negotiating points?
While seller financing is something you always want in a deal, I would suggest that you shoot for at least 40%. Although deals vary, the note should generally be for five years, at around 6% - 8% with the ability to prepay at any time. I would also recommend:
As a side bar, if the business proceeds well in the future and you can afford it, approach the seller and offer to pay off the note immediately for a sizeable discount (at least 20%).
|Get more expert advice in Richard Parker's How To Buy A Good Business At A Great Price - the most widely
used reference resource and strategy guide for buying a business.
|Richard Parker is the author of: How To Buy A Good Business At A Great Price, the most widely used reference resource and strategy guide for buying a business. He has purchased ten businesses in his career and has helped thousands of prospective buyers worldwide learn how to buy the right business for sale. He is also founder and President of Diomo Corporation - The Business Buyer Resource Center.|