Most small business sales combine three sources: the buyer’s own cash, a bank loan (often SBA-backed), and a seller note. BizBuySell reports that sellers have traditionally financed anywhere from 10% to a third or more of the price, and its 2025 survey found buyers looking for 30–40% while most sellers preferred 10–20%.
If the buyer also has an SBA loan, the bank sets rules for your note. Under the SBA’s procedures, buyers must put in at least 10% equity, and no more than half of that can come from a seller note. A seller note generally counts toward that equity only if it is on full standby, with no payments at all while the SBA loan is outstanding, which can mean ten years or more. A note that isn’t on standby doesn’t count as equity, and the lender will test whether the buyer can afford both loans. Get the lender’s terms in writing before you sign anything.
Friendly buyers make seller financing feel easier, and harder. Easier, because there’s trust. Harder, because nobody wants to chase a nephew or a longtime manager for a late payment. Write the terms as carefully as you would for a stranger, and agree up front how payments will be recorded and confirmed.
Two tax rules matter when the buyer is related to you. If you sell to a related person on installments and they resell within two years, you can be taxed as if you’d received the money then. And sales of depreciable property to certain related persons, such as a company you control, generally can’t use the installment method at all. See our guide to installment sale taxes.
PaperItUp records every payment with both sides confirming it, reminds the buyer about covenants and deadlines, and gives you and your CPA year-end tax schedules. We never hold your money.
There’s no single answer. BizBuySell reports that sellers have traditionally financed anywhere from 10% to a third or more of the price, and its 2025 survey found buyers looking for 30–40% while most sellers were comfortable at 10–20%. The right amount depends on the buyer, any bank loan, and how much risk you can carry.
At least the IRS minimum for your sale. If the stated interest is too low, the IRS can recharacterize part of the price as interest. For sales, the test rate is generally the lowest applicable federal rate for a note of your term (short, mid or long) in the three-month period ending with the month of the binding contract. Your CPA can confirm the right rate.
Yes. The note, the security agreement, any personal guarantee and the lien filing are legal documents, and a bank lender will have its own requirements. PaperItUp keeps the deal on track after closing; it doesn’t draft the documents.
That depends on the default terms in your note and security agreement and on any agreement with the buyer’s lender. A clear, shared payment record makes those conversations, and any enforcement, much simpler. Talk to your attorney before taking action.
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Last reviewed October 3, 2026. This guide is general information, not tax or legal advice. Rules depend on your facts and your state; check with your attorney, broker and CPA before you act. Questions: help@paperitup.com