Transfer of business: why you should go for the seller’s loan guarantee?

A seller's loan is a procedure that can help you sell your business quickly. 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 loan granted by a seller to a buyer. In the case of a business transfer, the seller will grant a loan to the buyer. In practice, the seller will only receive a part of the sale price on the day of the sale and transfer of the shares. Therefore, the loan contract 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 and thus allows the seller to reach more buyers by granting such conditions without lowering his or her selling price. Finally, the buyer will benefit from certain additional financial resources, which will enable him or her to carry out the takeover project.

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

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

The usefulness of the seller's loan for the seller!

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

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