It’s common for the person or entity who’s buying a business to not have the resources required to complete a cash sale. In that case, the seller may choose to finance a portion of the purchase price. Believe it or not, this can actually work out well for both the buyer and seller – as long as you’re working with a California business law attorney who makes sure everything is on the up and up.

There are advantages to the seller

It’s common for a seller to not be sure that they want to financing any part of the sale, because they run the risk that the buyer won’t pay them as they’ve agreed to. However, it’s often the case that a seller that’s willing to offer financing can get a higher price for the business.

Additionally, when a seller agrees to financing a certain percentage of the price, they’ll increase the number of companies or people interested in buying their business – which can make it both faster and easier to find the right buyer. It’s also true that some buyers won’t even consider buying a business if the seller isn’t willing to provide partial financing because they like the idea that the seller has some interest in the transaction coming through smoothly.

There are advantages to the buyer

The advantages aren’t just for the seller – the buyer has some advantages too, most of which are a little more obvious. For example, the buyer is able to purchase a business that’s beyond what they can personally handle paying in cash because the seller is willing to financing a portion of the sale. If they work with a savvy attorney who can help with the change of ownership, then they can get a reasonable Interest rate – which means they can avoid financing options that come with huge interest rates.

Finally, consider that if the entity buying the business is looking for a small business loan or a loan from their bank to cover a portion of the purchase price, the lender may very well look for seller financing for some of the cost because it indicates that the seller believes that the company they’re selling is likely to turn a profit right away. It’s seen as a sign of strength and some lenders will insist on it.

Do you have questions about the best way to buy or sell a business?

If you’re interested in selling your business or buying a business, then you should speak to a business attorney. At Law Offices of Torrence L. Howell, we have the experience you need. We can assess the deal, ensure everyone is getting a fair shake, and move forward with the necessary legal documents.

Call us today at (909) 920-0908 and get started with your free case evaluation. We’ll quickly go over your situation, will offer our general advice, and if you decide to move forward, we can begin to put a plan into motion.