Seller financing is any arrangement where the seller lends the buyer part or most of the purchase price, repaid over time with interest instead of all cash at close. It ranges from a small seller note alongside an SBA loan to a full seller-financed deal with no bank involved.
Two common forms
| Structure | Seller-financed portion |
|---|---|
| SBA + standby seller note | $50,000 (5%), on standby |
| Fully seller-financed | $800,000+ over 5 to 7 yrs, buyer puts down the rest |
With an SBA loan, seller financing usually must be on full standby to count toward your injection.
Why it matters when buying a business
Seller financing reduces the cash you need, keeps the seller motivated during transition, and can rescue a deal a bank won't fully fund. In SBA deals it's the mechanism behind the standby-note down-payment trick. In fully seller-financed deals it can even remove the bank entirely, at the cost of higher rates or a shorter term.
