Seller Notes current rates (Nov 2024)

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by a searcher from The University of Michigan - Stephen M. Ross School of Business
in Detroit, MI, USA

1yr ago

Seller Notes current rates (Nov 2024)

I'm looking at structuring an LOI with both Forgivable seller note paid over 6 years (because of extremely high customer concentration) and a standby seller note(standby for 2 years then paid over next three). What would be the current norm for interest rates, with prime at 7.75 % ? Is there any incentive for the seller to accept lower rate than I can get from SBA lender? If this makes any difference, the seller is from EU(France).

Thanks

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reply by a searcher 1yr ago
in Limerick, Ireland

Start at 0%!!! Incentive for seller on seller finance is higher pp. Seller is in the first position and their assets are protected in the event of a worst case scenario (default). Plus no credit committee process, assuming its 100% seller finance.

reply by a searcher 1yr ago
from Columbia University in New York, NY, USA

You should not be comparing the seller note rate to your SBA pricing. The alternative for the seller would be CDs or government bonds. Anything with a higher rate should be attractive to them