Business Brokers of America: Utah's Experienced Brokers

Professionals like Business Brokers of America help Utah business owners evaluate various strategies and business exit strategies as they face an ever-changing market. Many ask questions like, “Should I offer seller financing as a solution to attract qualified buyers and preserve their asking price?”

If SBA loan rates hovering around 10% can decrease a business's value by hundreds of thousands of dollars, could alternative financing arrangements become attractive? Before making a decision about offering financing options, business owners need to consider multiple factors.

How Seller Financing Works for Utah Business Sales

Business sale financing through seller arrangements involves the seller carrying part of the purchase price as a loan to the buyer. That way, the buyer doesn’t have to go through the bank to cover the full financing amount.

Typically, a buyer can provide a down payment between 20% and 50% of the total selling price. With seller financing, the seller carries the remaining balance as a promissory note that buyers repay. In many cases, this loan arrangement spans approximately three years.

Should I Offer Seller Financing to Qualified Buyers in Utah?

It’s important that attorneys document these types of financing arrangements through formal promissory notes that outline payment terms, interest rates, and collateral requirements. Sellers often secure the note with collateral, such as real estate or vehicles, depending on deal size. Multi-state transactions may require lien perfection and UCC filing compliance.

In Utah, seller-financed deals may close within 30 days (compared to 90 to 110 days for traditional bank loans). Another seller financing benefit includes maintaining business valuations in challenging market conditions. A business worth $2 million under normal circumstances might only appraise at $1.6 million when SBA interest rates factor into it, whereas seller financing allows an owner to preserve their asking price.

According to the International Business Brokers Association, seller financing demonstrates confidence in the business's future performance. Expanded buyer pools are another advantage that experienced business brokers in Utah cite. It can attract younger entrepreneurs and first-time business buyers who lack substantial capital reserves, increasing the competition for better offers.

What Factors Play a Role in Seller Financing?

If you are still asking, “Should I offer seller financing?” know that high-interest-rate environments make seller financing benefits more noticeable. Traditional bank loans significantly reduce valuations, so Utah’s current market conditions play a major role in this decision for local business owners.

Seller financing options work best when sellers can afford to receive payments over time rather than requiring immediate full cash-out. Owners planning to retire immediately or reinvesting proceeds into new ventures may prefer traditional all-cash transactions. Other key considerations include:

• The buyer's financial strength and industry experience

• The business's stability and growth trajectory

• The available collateral

• The seller's post-sale involvement preferences

Credit history, liquidity, and industry background also matter significantly when conducting due diligence.

About Business Brokers of America

That’s the Utah business owner’s short answer to, “Should I offer seller financing?” However, accurately comparing traditional financing versus seller-financed scenarios requires detailed valuation impacts and risk assessments. For more comprehensive business exit strategies and tailored advice in Utah, business owners should contact Business Brokers of America at (801) 935-8919.

Contact Information:

Business Brokers of America

2825 E Cottonwood Pkwy Suite 500 - #3814, Salt Lake City, UT 84121
Salt Lake City, UT 84121
United States

Michelle Regner
(801) 935-8919
https://businessbrokersofamerica.com/