When you sell, the buyer's financing shapes nearly everything: how long closing takes, what records you'll need, and how much of the price you receive on day one.
SBA loans
Many small business purchases in the U.S. are financed with SBA 7(a) loans, made by banks and partly guaranteed by the Small Business Administration. Buyers typically put in a down payment and the bank lends much of the rest. For sellers, this means:
- The lender will review your tax returns and financials closely
- The business's earnings need to comfortably cover the loan payments
- Closing takes longer than an all-cash deal
- SBA rules can limit how long you stay involved after the sale
Seller financing
A seller note means you finance part of the price yourself, and the buyer pays you over time with interest. It's common in small business sales and can help a deal get done at a better price. The tradeoff is that some of your money arrives later and depends on the business continuing to perform.
Earnouts
An earnout ties part of the price to future results, such as revenue or profit targets after closing. Earnouts can bridge a gap when buyer and seller disagree on value, but they need clear, measurable terms.
Other sources
- Cash and investors: some buyers bring their own capital or outside equity.
- Conventional bank loans: more common for larger buyers or strategic acquirers.
- Rollover retirement funds: some individual buyers use retirement savings through specific structures.
What this means for you
Lenders finance businesses with clean, verifiable earnings. The better your records, the more buyers can get approved, and the stronger your position in negotiations. Talk with your accountant and attorney about how any financing you offer would be secured.
Want to know where your business stands? Take the free readiness assessment or request a free valuation.
This article is general information, not legal, tax, or financial advice.