The interest rate of the seller note is typically at or below bank prime rates. The term of the seller note is usually similar to that of a bank. Monthly payments are the norm and usually start 30 days from the date of sale unless the payment schedule must be modified to allow for the seasonality of the business revenues. The seller note would also usually have a longer term if real estate were being financed. When a seller offers seller financing, the price the buyer can afford to pay goes up as the amount of the down payment required by the seller goes down.
Sellers are nearly always reluctant to offer seller financing.
Like all of us, they fear the unknown. Despite the advantages of playing bank, it is an uncomfortable role for them. They usually come around to seller financing only after some effort has been made to persuade them. A seller's first encounter on this issue might be with the business broker. In many cases, but not all, the business broker will bring up the issue.