Seller Financing

Definition

A note payable or loan to the shareholder(s) or owner(s) of a business provided in the sale or transition of a company by the buyer.

See Also

Promissory note, security agreement, UCC, UCC lien, seller carry-back.

Tips

Seller financing is typically used to bridge a valuation gap either where other forms of financing are not available or where a buyer desires to preserve the borrowing ability of the selling company for secured financing. Seller financing is subordinated below all other debt.