3 Reasons To Offer Seller Financing When Selling Your Business
If you are thinking about selling your business, it's a good idea to consider offering seller financing. Basically, this means that you will "carry the note" and accept the monthly payments from the buyer instead of asking for a full payment up-front, which often requires financing. These are a few reasons why this might be a smart decision when selling your business.
1. Make Your Business Easier to Sell
Finding a buyer for your business can be challenging, which can leave you with your business up for sale for a long time. If you're ready to do something now, offering seller financing is a good way to bring in more interested buyers and to make your business easier to sell. If interested parties know that you will finance the loan for them, they won't have to worry about getting denied. This means that you might be able to find a buyer more quickly.
2. Put More Cash in Your Pocket
Another reason to consider selling your business with seller financing is the fact that you can put more money in your pocket. In a more typical sale with more traditional financing, the bank makes the interest off of the loan. When you finance the business, however, you can be the one who pockets the interest, not the bank. Plus, you may be able to charge more for your business if you offer seller financing. It's a good way to get a little more money for your business, even if you have to wait longer for it.
3. Maintain a Hand in Your Business
With a more traditional sale, you're done with the business once the cash is handed over. With seller financing, however, you will have the business as collateral for the loan. This means that if the buyer does not pay the loan as he or she is supposed to, you may be able to get the business back. This can be a good option if you would prefer that the business be returned to you in the event that things do not work out.
As you can see, offering seller financing when selling your business can be a smart decision. Before you do so, however, you will probably want to sit down with a business attorney to talk about the pros and cons and to have the paperwork drawn up for you. Then, you can make sure that you do it the right way.