Lenders that take seller financing as equity injection

searcher profile

February 03, 2024

by a searcher from Rice University - Jesse H. Jones Graduate School of Business in Houston, TX, USA

Hello,

Any lenders that take seller financing as equity injection? How much as seller financing to suffice as equity injection? 10%? 20%?

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
I concur with what Darrion said above. We are a Commercial Loan Brokerage Shop with over 500 funding partners and over 60 SBA funding partners. I can tell you that none of our SBA funding partners are doing deals with no buyer equity at all with a very few exceptions. The only exceptions I have seen is the seller note is substantially more than 10%, like 40% or more; the buyer is currently working for the company already so there is little to no transition risk; and the seller has substantial direct industry experience that is transferable. If you are just buying a standard business I would plan to put 5% down. Most SBA lenders are requiring 5% down with a 10% seller note on standby for 2-years. I would be very cautious of anyone that tells you differently. I have heard of multiple situations where term sheets were provided with nothing down but when the loan got approved the lender ended up requiring a down payment. I hope this helps. If you would like to discuss further you can reach me here or directly at redacted Good luck.
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Reply by a lender
in Oakland, CA, USA
We have lenders that'll source the entirety of the equity injection from the seller note if borrower has direct industry experience. At minimum note has to be 10%, standby for 2 years. However, the problem I frequently run into is that borrowers who don't want to put in any sort of down payment in often don't have the necessary post close liquidity in order to get the deal done.

Happy to help and take a look at your deal however. Feel free to email me at redacted or call###-###-####
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