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Should You Use Seller Side Financing to Sell Your St Louis Business
Should You Use Seller-Side Financing to Sell Your St. Louis Business?
When you're selling a business in St. Louis, you're looking for a few things in your potential buyer. Having enough cash to meet your price is at the top of the list, but not every buyer can clear that hurdle up front. Your business might be exceptionally valuable, the buyer's funds might be tied up in other investments or it could be that the person or company looking to buy your enterprise has trouble raising the loan or seed money to buy your business.
That's when seller-side financing starts to look like an attractive option. When you have a confirmed interested buyer, but the deal can't go through because of financing issues, offering to sell the company in installments makes a lot of sense and could potentially raise the overall price you get for selling your business in St. Louis.
Advantages of Seller-Side Financing
If you've never sold a business with seller-side financing before, you could be forgiven for having your doubts about it. Waiting to find a buyer with bank financing or venture capital puts the money in your hand at once and concludes the sale on a short turnaround. This can be attractive to sellers who want to use their capital to move onto a new project or who don't want to wait to get full price, for whatever reason. The advantages of financing the sale of your business on your own, however, are significant. By offering seller-side financing, you can:
- Attract more buyers. However, many buyers are interested in your business, some of them will almost certainly not meet the standards lenders charge. The Missouri Small Business Association, for instance, typically requires borrowers to have a FICO score of at least 640 before they can finance a loan. Skipping the loan and financing on your end lets you set your own, more inclusive standards and get more potential buyers in the ballpark.
- Close more quickly. No matter how easy a lender advertises its process to be, financing a business purchase in St. Louis is anything but simple. Because seller-side financing is a private deal between yourself and your buyer, the contracts can be signed as soon as you agree on terms, with no need to wait for bank approval.
- Save on fees. Lenders charge for their loans, and those fees can add up. Even the most affordable lenders charge a guaranty fee of between 2 and 4 percent, depending on the amount borrowed. For a million-dollar business sale in St. Louis, seller-side financing could save tens of thousands of dollars.
- Fetch a higher price. More buyers, fast turnarounds and no fees all add up to potentially higher sale prices for you because you are, in effect, acting as the seller and the lender both. Many buyers are also more willing to raise their bids when the seller offers private financing because it saves them money in the long run.
Thinking About Seller-Side Financing in St. Louis
If you own a business in the St. Louis area and you're wondering whether seller-side financing is a good fit for your company sale, the experienced professional business brokers at LINK can help put your options in perspective with a free consultation. Call one of our finance specialists at (314) 487-0005 for advice or for help organizing your St. Louis business for sale. We can also be reached by emailing at firstname.lastname@example.org. LINK is in the state of Missouri to help business owners get the best terms possible for the sale of their companies. Call or email today to learn how we can help you arrange seller-side financing for your business in St. Louis.