The financing strategy that reduces your down payment to zero

Seller financing is one of the most powerful tools in acquisitions.

Done right, it can eliminate your down payment entirely while keeping the seller invested in your success.

But most sellers won’t offer it unless you know how to position it correctly.

Today I’ll show you why sellers agree to it and how to structure it in your favor.

Why Sellers Say Yes to Financing

Most sellers prefer cash at closing, so you need to understand their motivations to make this work.

Tax advantages

Selling a business triggers significant capital gains taxes.

But if the seller finances part of the sale, they can spread that tax burden over multiple years instead of taking the entire hit upfront.

On a $1M sale, financing $200K over 5 years could save them tens of thousands in taxes while earning interest on the note.

Many sellers don’t know this, so explaining the tax benefit can open the door.

Bridging valuation gaps

Sometimes a seller wants $1.2M but the bank will only lend based on a $1M valuation.

If the seller finances the $200K gap, the deal can move forward at their preferred price.

This works especially well when the seller is emotionally attached to getting a certain number.

Creating retirement income

If the seller is financially comfortable and already has significant savings, monthly payments might be more attractive than a lump sum.

Instead of managing a large windfall, they get predictable income for years, essentially creating their own annuity with interest.

(Inside Acquisition Ace, members learn exactly how to position seller financing in negotiations and structure terms that work for both parties. Want to learn that process and the ins and outs of successful acquisitions? Book a call with our team here.)

Why This Benefits You as the Buyer

Beyond reducing your upfront capital, seller financing creates two massive advantages:

1. The seller stays engaged

When the seller holds a note, their payout depends on the business continuing to succeed.

They’ll be motivated to help with the transition, answer questions, and ensure customers stay happy.

Their financial success is tied directly to yours.

2. It can count as your equity injection

Under SBA guidelines, a seller note on full standby (no payments for 10+ years) can qualify as part of your down payment.

For example: You need 10% down on a $1M business ($100K). The seller provides a $100K note on full standby. The bank counts that as your equity, meaning you bring only 5% to closing.

You just bought a million-dollar business with only spending 5% of the total price.

How to Structure It

The key is making the seller note work for both parties:

• Typical term: 5-10 years

• Interest rate: Matches or slightly exceeds the SBA rate

• Full standby: 10+ years (required for it to count as equity)

• Monthly payments: Begin after standby period ends

This structure protects your cash flow while the seller still gets paid competitively.

If you want to learn how to structure creative financing deals in the Acquisition Ace community (with 2,000+ other members)…

👉 Book a call with my team to see if you’d be a good fit.

Onward,

— Ben Kelly