Seller Financing Common Sellers often prefer to finance their own business sale because 'playing bank' can be a smart strategy to achieve the highest possible purchase price. But, even when they don't want to, the realities of the sale often force them into it. Buyers need and want seller financing. They usually take an interest rate below prevailing bank rates. Seller note terms are usually easier to negotiate than bank note terms.
Sellers are usually more flexible because they understand the needs of the businesses they sell.
Sometimes, banks will only participate when there is a large amount of seller financing to indicate that the business is sound in the eyes of the seller. Seller are very reluctant to finance large sums if they are forced to accept a security interest which is subordinate to that of another lender. Banks Finance Assets Banks are reluctant lenders for small business acquisitions by first-time buyers. For many reasons, small business acquisition lending is often considered too risky and too cumbersome unless the loan package fits under some type of government-subsidized guaranty program. Even then, the amounts banks will finance are usually limited by the values of the underlying tangible assets being pledged as collateral.