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FLORIDA Business Brokers – Ask For Some Seller Financing

February 1, 2013

The vast majority of small business acquisitions involve seller financing. In fact, it’s estimated that over 80% include some for of financial aid from the former owner. While the percentages vary, it’s generally 30% to 50% of the total purchase price. When you think about the situation, it makes perfect sense. First of all, by providing financing, the seller validates the viability of the business itself. Also, the seller is able to get the highest price possible by funding part of the acquisition.

From a buyer’s perspective, it serves to reinforce that the seller is also at risk in the transaction. It’s a perfect mechanism to help ensure that what you’ve been told by the seller is true and accurate. It also serves as a mechanism to deal with situations that may arise later on that come about as a result of their actions where you may need the ability to offset their financing.

  • While the terms vary for seller financing, you can expect to pay about 6-8% over four to five years. Plus, you have the ability to get far more creative with seller financing than any other:
  • Negotiate a holiday from any payments for three-six months after closing
  • Allow for the first year to be all principal
  • Have the right to make lump sum payments several times a year towards the principal
  • No prepayment penalty
  • You can arrange for lower payments throughout the loan with a balloon payment down the road
  • While you will have to sign personally, you will not have to personally collateralize the loan. The seller’s lien is against the assets of the business.

FBO has many more Sellers willing to take back a note than ever before. Take advantage of the times and view our listings for sale at: www.FLORIDABusinessOpportunities.com

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