You are the bank now. See if you like the job.
For owners pricing a sale where they carry the buyer's note.
Takes about 2 minutes
Run the numbers
This is math with public numbers in it. It is an estimate, not an offer, not a valuation and not advice. Your accountant or broker will have better inputs than we do. Vaultfish helps you run the process. We are not lawyers and this is not legal advice. If you need counsel who knows this area, we can point you to one. Ask for a referral
Seller financing calculator
What you get, and when
$15,840.96
a month, paid to you
Where the price goes
- Paid at closing $200K
- Note principal $800K
- Interest on top $150K
Cash by year
- Principal
- Interest
Principal repaid: 65% of the price ($646,191). Still owed to you: $353,809.
Cash in your hand by then is $770,275, with interest counted.
By month 36 you have been repaid 65% of the price and the buyer still owes $354K.
Straight amortization math, shown on this page as a schedule, not a quote.
See the numbers as a table
| Year | Principal | Interest | Balloon |
|---|---|---|---|
| 1 | $138,478 | $51,613 | none |
| 2 | $148,489 | $41,603 | none |
| 3 | $159,223 | $30,868 | none |
| 4 | $170,734 | $19,358 | none |
| 5 | $183,076 | $7,016 | none |
This is math with public numbers in it. It is an estimate, not an offer, not a valuation and not advice.
What this means
- The down payment is the cash in your hand on closing day. The rest is a promise.
- Each payment the buyer makes moves you closer to whole. The scrubber shows how close.
- A balloon is one big bill at the end. Ask what happens if the buyer cannot pay it.
How a seller note works
Selling with a seller note is like selling your car to a cousin who pays you back every month. The cash the buyer pays at closing is the down payment. The rest becomes a note, a written promise to pay you over time, with interest.
The math is standard amortization. Each month the interest is the balance times the yearly rate, divided by 12. The payment is rounded to the cent, and the last payment clears whatever is left.
The calculator shows three shapes
- Pays down evenly. Each payment covers interest and a slice of the price. The balance reaches zero at the end.
- Interest only, then balloon. The buyer pays interest each month, and the whole note comes due at the end.
- Balloon at year 5. Payments are sized for the full term, then whatever is left is due in year 5.
Where the common range comes from
Common range in public articles: 6 to 8 percent. The overlap of the four ranges below. No source here is a quote. Each page states its own range.
See the four sources
- Guidant Financial: 6 to 10 percent.
- Morgan & Westfield: 6 to 8 percent.
- ClearlyAcquired: 5 to 10 percent.
- Surge Law: 5 to 8 percent.
Term, share financed and the SBA rule
- Most seller notes run 3 to 7 years.
- Morgan & Westfield: 3 to 7 years, average 5.
- Surge Law: 3 to 7 years.
- OffDeal: 3 to 7 years.
- Flippa, for online businesses: 1 to 5 years.
- Seller notes commonly cover 10 to 15 percent of the price in sources that give a typical figure, and up to half in some small deals.
- ClearlyAcquired: 10 to 15 percent typical.
- Morgan & Westfield: 10 to 30 percent in the middle market.
- OffDeal: 10 to 50 percent.
- In an SBA-backed sale, a seller note counts toward the buyer's equity only if it sits on full standby for the life of the loan.
Questions people ask
What is seller financing?
You act as the lender for part of the price. A buyer pays a down payment at closing and signs a note for the rest. Then the buyer pays you back over time, with interest.
What interest rate do sellers charge?
Public articles often cite 6 to 8 percent. Guidant, Morgan & Westfield, ClearlyAcquired and Surge Law give ranges between 5 and 10 percent. Your deal can sit outside the range.
How long does a seller note run?
Most notes run 3 to 7 years, and Morgan & Westfield puts the average at 5. Online-business sellers often use shorter notes, 1 to 5 years, per Flippa.
What is a balloon payment?
A balloon is a big lump sum due at the end of the note. The monthly payments are small, and whatever is left is due at once.
What if the buyer stops paying?
Your cash stops too. Slide the scrubber to see how much of the price has been repaid, and how much is still owed to you, at any month. What you can do next depends on the note and any security behind it, so ask a lawyer to draft both.
Does a seller note help the buyer get an SBA loan?
Sometimes. Under SBA SOP 50 10 8, a seller note counts toward the buyer's equity only if it sits on full standby for the life of the loan. Starfield & Smith says it is capped at half of the 10 percent minimum. Standby means you collect nothing until the bank is paid, so check that rule before you agree to it.
