The idea is that at that point, the business will be on a solid footing and bank financing will be easier to find. In that case, you are second in line if the buyer defaults on the primary loan. Obviously, this is not as desirable a position for you, and if you agree to it you should demand a higher interest rate. Protecting your interests. If you agree to finance part of the deal, you should try to get the buyer to provide more security for the loan, besides the business itself.
Some buyers have other commercial real estate, or investments that can provide more security.
You can also require the seller to personally guarantee the loan, just as a commercial lender would. This can protect you if, as is often the case, the buyer finds that running the business is harder than it looks and is tempted to welsh on the deal. And, of course, you'll want to thoroughly check out the buyer's background, including credit record, management experience, personal assets, and character, just as the buyer will check you out during the due diligence phase of negotiations. In order to further protect yourself, you should require the buyer to take out a life insurance policy with yourself as beneficiary, so that the loan will be paid off if the buyer meets an untimely demise. If the buyer will be actively working in the business, you might also consider getting disability insurance on the buyer, although sometimes this is prohibitively expensive.