Seller financing (also called owner financing) happens when the business owner agrees to accept payments over time rather than getting all their money at the time of closing.
As LendingTree explains, “After making a cash down payment of 10% to 50% of the purchase price, buyers may finance the rest with seller financing, sometimes in combination with loans from traditional lenders” (LendingTree, 2024).
You’ll typically make a down payment and sign a promissory note outlining:
- The payment schedule
- Interest rate
- Term length (usually 3-7 years)
- Any collateral requirements
Five Advantages of Seller Financing for Buyers
1. Easier Qualification Process
Banks have strict lending standards that can be hard to meet. Seller financing often has more flexible qualification requirements.
According to Guidant Financial, this approach can be “a favorable option for both the seller and buyer of an existing business” when traditional financing options aren’t available (Guidant Financial, 2024).
2. More Favorable Terms
Seller financing often comes with competitive terms. Without bank overhead costs, sellers can sometimes offer:
- Lower interest rates
- Flexible payment schedules that match the seasonal nature of lawn care businesses
- Customized terms that work for both parties
3. Faster Closing Process
Bank loans can take months to approve, potentially causing deals to fall apart. With seller financing, you can often close in weeks instead of months.
This speed is crucial when timing your purchase to coincide with the beginning of a service season.
4. Shows Seller Confidence
When a seller finances part of the sale, it shows they believe in the business’s future. As noted by Sunbelt Business Advisors, “Seller financing signals to the buyer that the seller believes in the business and its continued success” (Sunbelt, 2024).
For SpringGreen franchisees, this provides reassurance about the quality of the customer base you’re acquiring.
5. Makes More Deals Possible
Many lawn care business acquisitions wouldn’t happen without seller financing. According to Swoop, “Approximately 90% of small business sales in the US involve some form of seller financing” (Swoop, 2024).
Small lawn care operations often lack the hard assets banks prefer as collateral, making seller financing essential to bridge financing gaps.
Five Potential Drawbacks to Consider
1. Larger Down Payments
While qualification may be easier, sellers typically require larger down payments than banks—often 20-30% versus the 10-15% a bank might accept.
MidStreet Advisors points out that this means “you’ll receive less cash at closing” as a seller, which is also relevant to understand as a buyer (MidStreet, 2024).
2. Shorter Repayment Periods
Seller financing usually comes with shorter terms than bank loans—typically 3-7 years versus 10+ years for SBA loans.
These compressed timelines mean higher monthly payments, which can strain cash flow during the critical business transition period.
3. Continued Seller Involvement
With money still invested in the business, sellers may want ongoing involvement or influence. While their expertise can be valuable, it might clash with how you want to run your “new” business.
Clear boundaries must be established from the beginning.
4. Default Risks
If business performance doesn’t meet expectations and you struggle to make payments, the relationship with the seller can become complicated.
These situations can be personally challenging, especially if the seller remains active in the local community where you operate.
5. Partial Financing Only
According to Financial Poise, “Seller financing is commonly used in conjunction with third-party financing” (Financial Poise, 2025).
Most sellers want a substantial portion in cash at closing, typically leaving 50-70% for financing. This means you’ll likely need to combine seller financing with other funding sources.
Best Practices for SpringGreen Franchisees
If you’re considering buying or selling a lawn care, pest control or tree care business with seller financing, follow these guidelines:
1. Negotiate Seasonal Payment Structures
Structure payments to align with your cash flow—higher during peak months and lower during off-seasons.
2. Get Everything in Writing
Despite the more personal nature of seller financing, proper documentation is essential. Work with an attorney experienced in business acquisitions.
3. Plan the Transition Carefully
Define exactly how and when the seller will transition out of the business. Create specific milestones for knowledge transfer, customer introductions, and employee transitions.
4. Do Thorough Due Diligence
The relative ease of seller financing shouldn’t lead to shortcuts in due diligence. Thoroughly verify all aspects of the business, including customer contracts, equipment condition, and regulatory compliance.
5. Consider Mixed Financing
The most successful acquisitions often combine seller financing with conventional loans. This approach gives sellers some cash at closing while still providing you with flexible terms.
Conclusion
For SpringGreen franchisees looking to acquire existing businesses, seller financing represents a valuable tool. When structured properly, it can help you access opportunities that might otherwise be out of reach.
According to the Small Business Administration, seller financing “must be paid back over time with interest, but it could mean the difference between getting a deal done or walking away from the table” (LendingTree citing SBA, 2024).
By understanding both the benefits and challenges of seller financing, you can make informed decisions that lead to successful business acquisitions and position your SpringGreen franchise for long-term growth.
Looking to expand your SpringGreen franchise through acquisition? Visit franchise-opportunity.spring-green.com to connect with our business development team for personalized guidance on financing options.
