Sacramento, California (PRESS RELEASE – March 17, 2010) — Small business owners are finding that given the current market, offering seller financing can help sell their business. “A buyer may be ready to make a deal, but it’s the lack of traditional financing that is holding back most inspiring entrepreneurs,” stated Julie Gordon White, president of the California Association of Business Brokers (CABB – a nonprofit trade organization) and of Business Team, a division of BTI Group, Inc. “A seller can make their business more attractive by offering seller financing.”
Gordon White says there are reasons why seller financing can benefit the seller:
- Faster sale. Seller financing can be an attractive offer for buyers which means sellers can sell their business faster and at a higher price.
- Flexibility. Seller financing enables the seller to create a payment schedule, interest rate and loan period that fits both the buyer and the seller’s needs.
- Tax breaks. Taking a note for part of the purchase price of a business may allow sellers a tax break. The seller may be able to defer some of the tax due on the sale of the business until full payment is received.
- Protections. Seller financing also gives the seller the power to ask the new owner to keep the seller informed by requesting monthly profit and loss statements, employee headcount, order backlog and/or inventory levels with their monthly payment. This allows the seller to keep track of the business and step in to offer help if they see a problem.
Although seller financing is an option that can get everyone what they are looking for, Gordon White says that it’s important to remember that there is some risk involved. “Just as a buyer should practice due diligence when buying a business, a seller should do some background work to ensure that the buyer is creditworthy and has a plan to take the business in a positive direction since by carrying a note, the seller will become the bank,” Gordon White stated.
Gordon White says that a certified business broker can help a business owner review the benefits of seller financing. “A broker can help develop a deal that is fair to both the buyer and seller,” Gordon White stated. www.cabb.org.