Transfer of business: why you should choose the seller’s loan guarantee

The seller's loan is a method that can help you sell your business. It is therefore very important to understand how it works and know the conditions for its implementation.

The seller's loan in a nutshell!

A seller's loan is a credit granted by a seller to a buyer. In the case of a business transfer, the seller grants a loan to the buyer. In practice, the former will only receive a part of the sale price on the day of the sale and transfer of the shares. Therefore, the loan agreement will be signed at the same time using professionals on, and the balance loan granted to the transferee will be contracted. This payment facility usually represents 30% of the sale price, which is advantageous for both the buyer and the seller. First of all, it favours the transfer, which allows the seller to reach more buyers by granting such conditions without lowering his or her selling price. The buyer will also benefit from some additional financial resources, enabling him or her to carry out his or her takeover project.

The benefits of going the seller's loan route for the buyer

The seller's loan is above all designed to make the transfer of the business for both parties. However, it is important to understand the buyer's interest and to include it in the negotiation. The major advantage of the seller's loan for buyers is of course the increased flexibility of financing. Indeed, they will be able to obtain financing resources that they cannot obtain from the bank, generally because of the contribution/loan ratio, which is currently about 1/3 in France, fr example. In addition, the seller's loan will create a general climate of confidence around the buyer. Indeed, employees, suppliers, customers and bankers have proof that the seller trusts the buyer, as he will accept to take the risk of financing him. Finally, the buyer will benefit from the support granted to him or her during the purchase, which is probably promised by the seller.

The usefulness of this loan for the seller

The fundamental benefit of the seller's loan is that the latter can be firmer on the price, thus negotiating one that is closer to his or her initial expectations. Secondly, this method allows the seller to gain the confidence of prospective buyers, boost performance and increase turnover. Ultimately, by facilitating the sale of the business, the seller will be able to choose the buyer who, in his or her opinion, comes with the best brand image, whatever his or her financial situation. The sellers are generally committed to the long-term future of their business and in most cases, they even consider lowering the price to support the ideal buyers.

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