What is owner financing?

Instead of the buyer paying the whole price at closing, you agree to be paid part of it over time. The unpaid part becomes a written promissory note with an interest rate, a payment schedule and security behind it. People also call it seller financing or a seller note.

How much of the price is usually carried?

It varies deal by deal. A seller note is normally a minority of the price rather than most of it, sitting behind a cash payment at closing and, where a lender is involved, behind the bank's loan. There is no standard figure and anyone who quotes you one without seeing the business is guessing.

Do I get more for the business if I carry a note?

Often yes, because you are taking on some of the risk the buyer or their lender would otherwise price into the offer. It is also why the interest rate, the term and the security matter as much as the headline price — a higher number paid slowly is not automatically better than a lower one paid now.

What happens if the buyer stops paying?

That is what the security in the note is for: a lien on the business assets, a personal guarantee, and in some deals the right to take the business back. The protections only work if they are written properly at closing, which is a job for your attorney, not for a handshake.

Does owner financing change my tax position?

It can. Being paid over several years may spread the gain rather than landing it all in one tax year, and the interest is taxed differently from the sale proceeds. The effect depends on how the deal is structured and on your own circumstances — ask your CPA before you agree terms, not after.

Do you require owner financing?

No. We buy outright and we also structure deals with a seller note where it suits the owner. It is one option to discuss, never a condition of talking to us.

Owner Financing: Carrying Part of Your Own Sale

Owner financing means part of the price is paid to you over time instead of at closing. For some owners it widens the field of buyers and improves the deal. For others it is risk they do not need to take.

Written by the Northland Retail Acquisitions team · Reviewed 2026-09-13

What it actually is

You sell the business, the buyer pays you a sum at closing, and the rest is written into a promissory note you hold. The note sets out the amount, the interest rate, how long the payments run, what happens if a payment is missed, and what stands behind it if the buyer fails. It is a loan you are making, in effect, secured on the business you just sold.

Two other names describe the same thing: seller financing and a seller note. In most deals it sits alongside the buyer's own money and, where there is one, a bank loan — not instead of them.

Why owners choose it

Reason	What it means in practice
More buyers can reach your price	A capable operator can often fund most of a purchase but not all of it. Carrying part of the price brings that person to the table instead of leaving only the handful of all-cash buyers.
It can support a better price	You are absorbing risk that the buyer or their lender would otherwise discount for. Owners who carry a note frequently do so in exchange for terms they would not have got on a straight cash deal.
Interest is income	The unpaid balance earns interest for you at a rate you agree at the outset, which is not the case with money sitting in an account after a cash closing.
It can spread the tax year	Receiving the price across several years may spread the gain instead of concentrating it in one. Your CPA should confirm how that works for your situation.
It helps the deal close	Where a lender wants to see the seller stay committed, a note answers that. Deals that stall over the last slice of funding often move again once a note is on the table.
You choose who takes over	Financing part of the sale gives you a say in who buys and a continuing interest in them doing well — which matters if your name is on the building or your staff are staying.

Why it suits some owners and not others

It tends to suit an owner who does not need every dollar on the day, who believes the business will keep performing under a competent operator, and who would rather have a stronger overall deal than the fastest one. It tends not to suit an owner who needs the full amount immediately, who is selling because the business is struggling, or who would lose sleep over a payment arriving three days late.

Be honest with yourself about that last one. A note is only as good as the buyer running the business, and you will be watching them for years.

What a seller note should contain

The amount carried, the interest rate, and the payment schedule in writing
The term, and whether there is a balloon payment at the end
Security — a lien on the business assets, and usually a personal guarantee from the buyer
What counts as default, how much notice is given, and what you can do about it
Where the note ranks if there is a bank loan, and what that subordination allows you to do
Whether the buyer can prepay, and on what terms
Reporting: what financial information you receive while the note is outstanding

None of that is unusual, but all of it is negotiated. The gap between a well-drafted note and a casual one only shows up on the day something goes wrong, which is exactly when you cannot fix it.

How it sits with the rest of the deal

If the property is part of the sale, decide whether you are selling it, keeping it and leasing it to the buyer, or carrying financing on it — they are three different decisions with different risks. Business value vs property value covers why the two should be priced separately. And the earnings the note depends on are the same earnings a buyer is valuing, so it is worth knowing yours first — SDE and EBITDA explained.

How we handle it

We buy directly, and we are open to structuring part of a purchase as a seller note where that is what the owner wants. It is never a requirement. If you would rather be paid in full at closing, say so early and we will tell you plainly whether we can do it on terms you would accept.

Common questions

What is owner financing?: Instead of the buyer paying the whole price at closing, you agree to be paid part of it over time. The unpaid part becomes a written promissory note with an interest rate, a payment schedule and security behind it. People also call it seller financing or a seller note.
How much of the price is usually carried?: It varies deal by deal. A seller note is normally a minority of the price rather than most of it, sitting behind a cash payment at closing and, where a lender is involved, behind the bank's loan. There is no standard figure and anyone who quotes you one without seeing the business is guessing.
Do I get more for the business if I carry a note?: Often yes, because you are taking on some of the risk the buyer or their lender would otherwise price into the offer. It is also why the interest rate, the term and the security matter as much as the headline price — a higher number paid slowly is not automatically better than a lower one paid now.
What happens if the buyer stops paying?: That is what the security in the note is for: a lien on the business assets, a personal guarantee, and in some deals the right to take the business back. The protections only work if they are written properly at closing, which is a job for your attorney, not for a handshake.
Does owner financing change my tax position?: It can. Being paid over several years may spread the gain rather than landing it all in one tax year, and the interest is taxed differently from the sale proceeds. The effect depends on how the deal is structured and on your own circumstances — ask your CPA before you agree terms, not after.
Do you require owner financing?: No. We buy outright and we also structure deals with a seller note where it suits the owner. It is one option to discuss, never a condition of talking to us.