If you are selling or buying a business today, chances are seller financing will be part of the conversation. What was once seen as a fallback for hard-to-finance transactions has become a mainstream structuring tool — and the data backs it up.

According to the International Business Brokers Association's 2025 Market Pulse Report, “seller financing appears in 75–90% of transactions under $5M and 40–60% of transactions between $5M and $50M.” (Source)

Seller financing is not just showing up more often — it is carrying real weight in a buyer’s capital stack. Pepperdine University's 2025 Private Capital Markets Report found that, “the median seller note in deals under $5M carries a 6.2% interest rate, a 5-year term, and represents 25% of the purchase price.” (Source) In the lower middle market, seller notes typically run 5–20% of the purchase price, layered alongside Small Business Administration (SBA) loans or senior debt.

SBA lenders increasingly treat seller notes as a green flag, not a red one. As one SBA-focused advisory firm put it, “seller financing is one of the most important tools in small business acquisitions, capable of bridging valuation gaps, strengthening loan applications, and signaling the seller's confidence in the business's future”. They also state, “Lenders read a seller note as skin in the game: when a seller finances even a small portion of the transaction, it shows the lender the seller believes in the new owner's ability to succeed.” (Source)

For buyers, seller financing lowers the cash needed at closing and can close the gap between what a bank will lend and what the seller wants. For sellers, it can mean a higher effective sale price, ongoing interest income, and — under the IRS installment sale method — the ability to spread capital gains tax over several years instead of taking the full hit in year one.

With Baby Boomer business owners retiring in record numbers and transaction quality under more scrutiny than ever, seller financing is not going away. On both sides of the transaction, it is worth structuring seller financing into the plan from day one and not negotiating as an afterthought.

If you missed last month's newsletter, click link to read it:
SELLING BUSINESS: Seven Steps to Get Your Business Ready for Lender Financing

If you are thinking of selling or buying a business, contact one of our talented team members for a complimentary, confidential consultation.