Seller asking for collateral in a seller-financed deal

July 12, 2023
by a searcher from Brigham Young University in Vineyard, UT 84059, USA
Hi All,
I'm in negotiations for a business right now that is 80% seller financed. Since there isn't a bank involved or other hard assets, the seller is asking for collateral to hold against the seller financing. I'm a little unfamiliar how this typically works in business acquisition given that collateral isn't exactly the same as a personal guarantee.
Can anyone explain how collateral is different than a personal guarantee?
Is it possible to use a retirement Roth IRA as collateral? Or is it basically constrained to real estate, high-value items (i.e. cars), and cash?
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
from Boise State University in 800 W Main St, Boise, ID 83702, USA