A seller note is the part of a business's price that the seller agrees to be paid later, in installments, instead of at closing. Charlottesville, VA buyers use one alongside their own money and a term loan, which lowers the loan amount and keeps the seller invested in the business doing well.
Eastbrook Finance in Charlottesville, Virginia explains seller notes and acquisition loans, and forwards purchase requests to funding partners who review them and decide.
What Is a Seller Note When Buying a Charlottesville, VA Restaurant?
When you buy a restaurant, the seller may agree to take part of the price as a note: a written promise from the buyer to pay that amount, with interest, over an agreed schedule after closing. The rest of the price comes from the buyer's own money and a loan. A seller who carries a note has a reason to make the handover work, introducing the buyer to suppliers and regulars and staying reachable when questions come up.
A partner reading the purchase will ask how the note ranks against its loan. Many partners want the seller note to be paid only after the loan, or to wait for a set period before payments begin; the note's terms have to fit that. The restaurant loans page covers the kitchen side of a purchase.
A seller note has its own terms: an interest rate, a length, a payment schedule and what happens if the buyer misses a payment. Those terms are negotiated between buyer and seller, usually with each side's attorney, and written into the purchase agreement and a separate note. Agree them before the funding request goes out, since a partner will read the note as part of the deal.
How Does Seller Financing Work in a Business Sale? A Central Virginia Law Practice Case
Seller financing works the same way in a professional practice, with one difference: the value sits in client relationships. A note in a law practice sale may be tied to the clients who stay, so the buyer pays less if clients leave. That shifts some of the risk back to the seller and gives a partner a clearer picture of the risk. Rules on selling a law practice come from the state bar; confirm them with counsel before agreeing terms.
The law firm loans page covers practice purchases and partner buyouts.
How to Get a Business Acquisition Loan for a Central Virginia Retail Store
Getting an acquisition loan for a retail store starts with the seller's records. A partner reads the store's returns, monthly sales and margin, the stock on hand and how it is valued, the lease and its remaining years, and the buyer's own experience. The price usually covers fixtures, stock and goodwill; stock should be counted at closing, since it changes from week to week.
- Two or three years of the seller's business returns.
- Monthly sales for the last year or two.
- A letter of intent that states the price and lists what the buyer gets for it.
- The lease, and the landlord's consent to assignment.
- The buyer's own money and where it comes from.
The business loans for retail page covers stock and fixtures once the store is yours.
Count the costs that come with the purchase as well as the price: the new owner's business license from the city, a meals tax registration if the store sells prepared food, and any stock the seller let run down before the sale. Those costs come out of the same cash as the first loan payments.
What Type of Loan to Buy a Business? A Central Virginia Restaurant Case
The loan most buyers use to buy a business is a term loan: a fixed amount paid back in installments over years, matched to a purchase that earns over years. A line of credit is the wrong tool for the price itself, but a buyer may want one in place after closing for stock and wages. Equipment that comes with the business can sometimes be financed separately.
For a restaurant, the seller note and the term loan together usually cover most of the price, with the buyer's money making up the rest. For restaurant buyers in Charlottesville, VA, County Business Patterns counted 120 full-service and 92 limited-service restaurants with paid employees in the city in 2023.
Some sales also include an earnout, a part of the price paid only if the business hits agreed results after closing. An earnout and a seller note both defer part of the price, but an earnout depends on results while a note is owed regardless. A partner reads them differently, so name which one the deal uses.
A Purchase Split Three Ways, Invented Figures
Illustration only, invented figures: a buyer agrees to pay $380,000 for a shop. The buyer puts in $57,000, the seller carries a $76,000 note at 6% over 60 months, and a term loan covers the remaining $247,000 at an annual rate of 9.6% over 120 months (our arithmetic on invented figures: $57,000 plus $76,000 plus $247,000 makes $380,000).
The loan payment is about $3,210 a month and the note payment about $1,469, about $4,679 a month together for the first five years (our arithmetic on invented figures). The buyer checks that the shop's profit after the buyer's own pay covers that with room to spare; if it does not, the price or the split needs another look.
Try the numbers in the purchase loan calculator, and see the Charlottesville, VA page for city figures.
By Eastbrook Finance · Updated
