Seller Financing Calculator for Business Acquisitions
Seller financing – also called a seller note or seller carry-back – is a loan from the seller of a business to the buyer. Instead of receiving the full purchase price at closing, the seller agrees to receive a portion of the price over time, with interest. This arrangement is one of the most common deal structures in online business acquisitions.
Seller financing plays a critical role in ecommerce, SaaS, and digital business transactions. Buyers often cannot (or prefer not to) pay the full price upfront. SBA lenders typically require a seller note as part of the capital stack, and many deals simply would not close without some form of seller carry. For sellers, offering a note can attract more buyers, command a higher purchase price, and create a predictable income stream after the sale.
Use this free seller financing calculator to model the terms of a seller note. Enter the purchase price, financing structure, interest rate, and term to see monthly (or quarterly) payments, total interest, an amortization schedule, and the present value of the note. You can toggle between buyer and seller perspectives to see how the same deal looks from each side. The standby period feature lets you model deferred payments – common in SBA-backed deals where lender requirements delay seller note payments.
Present Value of the Seller Note
What is this note worth in today’s dollars? Adjust the discount rate to reflect your opportunity cost or required return.
Amortization Schedule
| # | Date | Payment | Principal | Interest | Balance |
|---|---|---|---|---|---|
| Total |
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Schedule a Free ConsultationUnderstanding Seller Financing in Online Business Transactions
A seller note is a financing arrangement where the business seller acts as a lender to the buyer. After the buyer pays the agreed-upon cash at closing (and any third-party financing such as an SBA loan), the remaining balance is structured as a promissory note payable to the seller over a defined period with interest.
- Seller Note (Seller Carry)
- A promissory note from the buyer to the seller for a portion of the purchase price, typically paid over 1-5 years with interest. The note is usually subordinate to any senior debt such as an SBA loan.
- Standby Period
- A period after closing during which no payments are made on the seller note. SBA lenders often require a standby period (commonly 12-24 months) to ensure the business can service the senior loan before seller note payments begin. Interest may or may not accrue during this time depending on deal terms.
- Amortization
- The process of paying off the note through regular scheduled payments that include both principal and interest. Each payment reduces the outstanding balance until the note is fully repaid.
- Present Value
- The current worth of future payments, discounted at a rate that reflects the time value of money and risk. A $100,000 note paid over 3 years is worth less than $100,000 today because of the delay in receiving funds and the risk of non-payment.
When Does Business Seller Financing Make Sense?
Seller financing is common in online business transactions for several reasons. Buyers may not qualify for full bank financing, or the deal size may fall below SBA minimums. Offering a seller note signals the seller’s confidence in the business and often results in a higher sale price. For buyers, it reduces the upfront capital required and aligns the seller’s interests with a smooth transition. Most ecommerce and SaaS deals in the $100K-$5M range involve some level of seller financing.
Frequently Asked Questions
What are typical seller financing terms in an online business sale?
Seller notes typically range from 10% to 30% of the total purchase price. In SBA-backed transactions, the SBA usually requires the seller to carry at least 5-10% of the purchase price on standby. The exact amount depends on the deal structure, buyer qualifications, and negotiation between the parties.
What interest rate is normal for a seller note?
Seller note interest rates typically range from 4% to 8% annually. The most common rate is around 5-6%. Rates below the IRS Applicable Federal Rate (AFR) may trigger imputed interest tax rules, so it is important to consult a tax advisor when setting the rate.
Can I negotiate the standby period on a seller note?
Yes. The standby period is negotiable, though SBA lenders may impose minimum requirements (often matching the loan term or a portion of it). Key negotiation points include whether interest accrues during standby and whether the buyer can make voluntary early payments during the standby period.
What happens if the buyer defaults on a seller note?
Default remedies depend on the terms of the promissory note and any related security agreements. Common remedies include acceleration of the full balance, default interest rates, and in some cases, the ability to reclaim collateral. Having an experienced M&A attorney draft clear default provisions protects both parties.