Seller Financing
The seller of a business you want to buy is the most motivated lender you will ever find. They already know the business works, they want to close the deal, and they’ll often lend you their own money to make it happen.
What It Is
Seller financing (also called a seller note) is when the person selling a business agrees to receive part of the purchase price over time, rather than all cash at closing. The seller becomes a lender. The buyer pays them back from the business’s own cash flow, typically over 12-60 months, sometimes with interest, sometimes without.
ramon-van-meer described his standard practice when buying online businesses: “Instead of the asking price of $400,000 all cash, you can offer: ‘I’ll pay you $250,000 cash up front at closing, and the remaining $150K I’ll pay spread out over the next 12 months, interest-free.’ Every time I buy a business it’s never 100% cash at closing. I always have 60 to 80% cash at closing and the remaining is either a seller’s note or an earn-out.”
Why Sellers Agree
Counterintuitive: sellers often prefer seller financing to all-cash offers. The reasons:
Tax advantages. An installment sale spreads the seller’s tax burden across multiple years rather than triggering a single large gain event. For a seller in a high tax bracket, this is genuinely valuable.
Higher effective price. A buyer who can structure a deal with seller financing can often offer a higher total price than an all-cash buyer who’s constrained by available capital.
Deal facilitation. When a business can’t get full bank or SBA financing, seller financing bridges the gap and allows a deal to close at all.
Seller alignment. Ramon’s additional rationale: seller notes “keep the seller engaged and helpful.” A seller who hasn’t been fully paid out has strong incentive to help the transition succeed.
The Nick Huber Case
The clearest illustration of creative seller financing on MFM came from nick-huber’s acquisition of Somewhere (formerly Support Shepherd). Nick needed to buy a controlling stake in the company but couldn’t raise enough from outside investors at reasonable economics.
His solution: he negotiated a seller note directly from the founder, Marshall, for 18% of the company’s value: “I carved out an 18% seller note directly from Marshall to me.”
shaan-puri explained the mechanics: “A seller note is basically the seller saying, ‘I will lend you essentially the money to pay me, and you’re going to pay me every year or every quarter.’”
In this case: roughly $9 million from Marshall structured as a seller note, alongside $20 million raised from outside investors. Nick’s total outlay was $29 million for majority control of a $52 million valuation company.
Starting from Zero: The Laundry Business
The most extreme seller financing example in the MFM archive involves a college freshman who bought a laundry pickup service at age 18 — with almost no money — entirely through seller financing.
The guest explained: “I bought a laundry business my freshman year of college. I did seller financing. Had to learn what that was at 18. I learned what a discounted cash flow analysis was at 18 just talking to business school professors.”
The sellers asked $30,000. He had roughly $2,000 saved. The deal closed on seller financing — he paid them out of the business’s revenue over time. That business, run during college, sold for more than 10x what he paid.
His framing: “I was like, ‘This is the most money I’ve ever heard of.’ I had maybe two grand saved up. So, I had to get creative and figure out how we were going to buy this and structure it.”
Combining Seller Financing with SBA Loans
The most common acquisition structure discussed on MFM: SBA loan covering 80-90% of the purchase price, seller note covering 10-20%, and buyer cash covering the down payment. This three-layer structure allows buyers with minimal capital to acquire businesses they couldn’t otherwise afford.
When shaan-puri walked through the mechanics on the Ramon Van Meer episode, he used seller financing as the optional addition to the SBA calculation: “Let’s say you did the full amount, no seller financing, just for simplicity.” The implication: adding a seller note would further reduce the buyer’s cash requirement and potentially lower their monthly debt service.
brent-beshore used a version of this structure for his first acquisition: leveraging the target company’s accounts receivable as the effective down payment and funding the remainder through SBA.
The Alignment Effect
Ramon’s most underappreciated observation: seller financing creates a motivated advisor. “That keeps the seller engaged and helpful.”
A seller who received 100% cash at closing has no economic reason to take your calls. A seller who’s still owed $150,000 over 12 months picks up the phone. They’ll answer questions about vendor relationships, customer quirks, and operational details that make the first year vastly smoother than it would otherwise be.
This isn’t just goodwill — it’s contractual alignment.
See also: sba-loans, acquisition-entrepreneurship, boring-businesses, nick-huber, brent-beshore, permanent-equity, codie-sanchez