When does interest start on a seller standby note?

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May 28, 2025

by a searcher from Utah State University - Jon M. Huntsman School of Business in St. Louis, Missouri, United States

I'm trying to get under contract on a manufacturing business, to make it work it'll require a sizable seller note to be on standby for 24 months. Does that mean interest starts accruing in 24 months or interest is accruing the whole time but payments start in 24 months? Thanks!
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
That is really up to what you can negotiate with the seller. I would say more often than not the interest is accruing but just not paid during the first 24-months. But if you can negotiate where there is no interest, more power to you. If you have other questions on seller notes, you can reach me here or directly at redacted
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Reply by a professional
from The Johns Hopkins University in Basking Ridge, NJ 07920, USA
Agree with Brad. It's all subject to negotiation, but generally interest accrues during standby.
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