Benefits to Offering Seller Financing when Listing your Business for Sale
In today’s market, seller-financed business sales are more common than ever before and can be advantageous for both sellers and buyers.
But first - What is Seller Financing? Seller Financing is when the business owner and seller allows the buyer to pay off a portion of the price of the business over time with interest.
Positioning your business for sale to attract a wide audience is crucial for sellers, and utilizing seller financing can be an effective strategy to achieve this goal.
Here are some top benefits to sellers offering seller financing:
1. Businesses for Sale offering Seller Financing are more likely to sell
Seller financing is increasingly becoming a sought-after option by buyers in the current market. According to BizBuySell’s Quarterly Insight Report, over 50% of buyers anticipate some form of financing from sellers. This expectation should encourage sellers to consider providing financing to stay competitive in the market.
2. Providing seller financing can enhance the chances of selling at a higher price
When financing the purchase of a business, sellers can set a higher selling price than in an all-cash deal. This is partly due to a greater demand for seller-financed businesses for sale, and also enables the seller to ask for a slightly higher price to offset the financing risk.
3. Seller Financing Provides a Stream of Income to Sellers
Offering seller financing not only involves setting a higher initial selling price but also generates profit through accumulated interest. This approach enables sellers to distribute the taxable income from the sale over time. Also, seller financing typically processes faster than commercial financing. Given that banks typically take a considerable amount of time between the underwriting and approval process, seller financing can facilitate a speedier sale by bypassing the tedious bank approval process.
4. Buyers receive additional choices and added reassurance
Most buyers will need financing to purchase a business. Sellers who offer financing typically show a greater dedication to their business, influencing the likelihood of the deal being finalized. Moreover, when owners are willing to remain financially invested and have a share in the business's future success, it boosts buyers' confidence in the business's credibility and operations.
Ultimately, assuming the role of the lender may seem daunting, but can yield more benefits than opting out.
If you’re interested in learning more about seller financing and the role it can play in your business for sale success, give us a call; our experienced team of business advisors are ready to lead you towards a profitable sale.
