tannyu

Has anyone financed a buyer? I'm selling our salon and our buyer wants partial financing. What's the best way to go about this. I'm a little nervous, but open to the idea. What if they don't run it well and end up closing shop, then I'm out money, or taking back a salon that has been run crummy. Any ideas would be helpful. Thanks!

unity

They are trying to protect themselves, not you. If you make it air tight you could have it written that even upon close of business they still owe. In fact, that may be how most are written.

Will a bank not finance them?

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movieking

Your attorney who is handling the sale should be able to do everything for you in a way that is in your best interest. Do not use a common attorney with your buyer.

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engfant

That is definitely one issue with "owner financing". You might lose out on the money.

If you want to do this I'd do 50% down then figure out a date when the "loan matures" like 1-5years or whatever and then you can set up a "loan fee" of some sort like 5% or whatever you feel is fair. You ALWAYS want to be making money ALWAYS. If they miss any payments then they can be dealt with via leg breakers or just repo'n the place back.

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tannyu

Thanks for the advice so far! I don't think they're trying to protect themselves, they just don't have ALL of the $$ right now, but they do have a good chunk.

engfant

Hey just remember, an IOU that pays even 50% of it's worth is still more than nothing. I'd rather someone owe me $50/month than them getting the same thing for $30 cause that's all they have.

No, I'll take the $30 NOW and the $20 later. Even if they can only come up with $10, that's still $10 more than I expected to get.

Remember, if you DO offer the "financing" (it's really more like payments than financing cause you aren't fronting the money) don't make it ridiculous.

You know they can't come up with $5K/month if you never even made that yourself (for instance). Better off being realistic and just getting paid.

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FancyPants

I've done this with 3 stores. Just have a lawyer go over everything, and get a decent amount up front. Charge anywhere from 5-8% interest. You can even do an amortized loan (You make more of course). Make sure you do a late fee and don't allow more than 7 days from the due date.

One thing I will recommend is to make the payments as low as you possibly can for up to 5 years (to be frank any more than 3 and you are pushing not getting your money). During the months of March, April and May get anywhere from 2-5k in those months. I've done these higher numbers differently with all of my stores for multiple years to get them paid off quickly. You can PM me if you need some specifics. If I knew what kind of numbers you were working with I could maybe tell you what is doable. It has worked out wonderful for me and the lower and higher payments for a seasonal business is great in these situations.

Years ago I did this with my banks, and it always worked for me, so i figured why not give it a shot with all my stores. No one has missed a beat (payment) yet.

:)

Hope that helps, and good luck with the sale!

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