This is the traditional financing method prevailing from the olden days. In the seller financing transaction, the seller is also acting as a lender for the purchase of a business or transfer of ownership. The reasons why prospects opt for this method is that lender financing will take longer than seller financing, and in the seller financing transactions, the seller is sharing the business risk after the close of escrow. This is good for the buyer. Also, as this method allows for closing the escrow faster than a lender loan, the buyer can take the seller’s advice from time to time if there is any drop in sales. The seller assistance to the buyer is one of the greatest assets to the buyer as the seller built the business.
The following are the most common requirements for seller financing (SF) or seller carry notes (SNC) or security agreement (SA) in America.