By Brett Kaufman. 8 years using relationships to build sales pipelines, from political fundraising to a 7 figure business to running matchmaking for two communities. Over 1,000 introductions facilitated.

To ask a seller for seller financing, raise it before the LOI, in a real conversation about what they want after the sale, and frame the note as the seller staying invested in the business doing well. Then show them plainly how the SBA treats the note, and put the agreed terms in writing.

Most buyers who search how to ask seller for seller financing are worried about the wrong thing. They are worried about the words. The words matter less than the timing and the relationship around them.

Here is the scene. You have had two good calls with the owner. The broker likes you. Your lender says the deal works if part of the equity comes from a seller note. And you are about to type “seller to carry 10%” into an LOI the owner has never discussed with you. That is the moment this conversation goes wrong.

I am not a lawyer or a tax advisor. Everything below about SBA rules is quoted from the SBA’s own document. Check your deal with your lender and your attorney.

What does the SBA actually allow for a seller note?

Under SBA SOP 50 10 8.1, effective October 1, 2026, a seller note can count as part of your equity only if it is on full standby, and only for up to half of the required injection.

The details that matter in the conversation:

• For an initial acquisition, the minimum equity injection is 10 percent, and the SOP says it “cannot be reduced or eliminated.” It is based on total project cost, not just the price.
• Seller debt that is subordinated to the lender and on full standby, meaning no payments of principal or interest for the term of the 7(a) loan, may be considered equity.
• Limited equity sources, which include standby debt, may provide no more than half of the required injection.
• Total debt supporting the purchase, including seller debt that is not on full standby, is limited to the business valuation and must be supported by debt service coverage.
• Seller debt in a change of ownership is eligible to be refinanced after it has been in place and current for 36 months.
• In an initial acquisition, the seller generally may not stay on as an officer, director, stockholder or employee, but the business may contract with the seller as a consultant for up to 24 months in aggregate.

That last point is half your conversation. Many owners want to stay connected to what they built. The SOP gives you a defined way to say yes.

Full standby or a paying note: what the seller hears

The two kinds of note sound similar to you. They sound very different to the owner.

	Full standby note	Paying seller note
Payments	None, principal or interest, for the term of the 7(a) loan	Per the note terms
Counts toward your equity	Yes, up to half of the required injection	No
Limit	Part of your equity math	Total debt capped at the business valuation
What the owner hears	“I wait years to see this money”	“I get paid over time”
What you need to offer	Real transparency, a clear path, the refinance option after 36 months current	Proof the cash flow covers it

The tax side is the owner’s question to answer with their own advisor. The IRS defines an installment sale as “a sale of property where you’ll receive at least one payment after the tax year in which the sale occurs,” and gain is generally reported as payments come in. Some owners like that. Tell them to ask their CPA, not you.

Illustrative math the owner can follow

This is illustrative, not a quote. Say total project cost is $2,000,000.

1. Required equity at 10 percent: $200,000.
2. The most a full standby seller note can cover: half, or $100,000.
3. The rest, at least $100,000, comes from your cash or other unlimited sources the SOP lists.

Walk the owner through those three lines in five minutes. Owners who understand the math stop treating the note as a trick.

How to ask seller for seller financing, step by step

Here is how I would run it.

1. Ask the broker first. Before the owner hears the word “note,” find out whether they have a view.

Before I write the LOI, does [Owner] have a view on carrying part of the price? I’d rather hear it from you than guess. Happy to walk them through how the SBA treats it.

2. Start with what the owner wants after close. Income, a role, the employees, the name on the building. Listen first.
3. Frame it as alignment. “I want you invested in this going well” is the honest version, and owners hear the difference.
4. Show the standby reality. If the note is on full standby, say it plainly: no payments for the term of the SBA loan. Hiding it is how you lose the deal at closing.
5. Offer something real back. A consulting agreement within the 24 month limit, a written update schedule, the 36 month refinance path.
6. Confirm it by text the same day, then in the LOI.

Thanks for the time today. Recapping so we’re on the same page: a standby note for part of the price, plus a consulting role. I’ll send the SBA language, and nothing goes in the LOI until you’ve seen it.

That text is under 40 words and does one job: nothing in the written offer surprises them.

Why is this a relationship decision, not a structure decision?

Because a seller note turns the owner into your lender for years. The person you are negotiating with this week is the person whose trust you will need when a quarter goes badly.

Treat the ask that way. If the owner says no, or says no to your first offer, see what to do when a seller rejects your LOI for how to restructure without starting over.

Keep the rest of your world warm while you negotiate

Structure talks drag. While you are going back and forth on a note, the brokers who are not on this deal stop hearing from you. That is covered in the brokers you lose during diligence and who to keep warm after the LOI. The full system is in deal flow for business buyers.

The system that remembers what the owner said

The owner told you on the first call what they want after close. You will not remember it on the fourth call unless it is written down where you will see it.

FRONT OF MIND opens on your 10 minutes for today. Each person has a one line reason why: a follow up due with the owner, a pipeline deal quiet seven days or more, the broker going cold. After the call, say the name and one sentence out loud, “wants to keep consulting, worried about the standby,” and it is captured. Every draft is a text style message, 40 words max, nothing sends without your tap, and it learns from your edits.

It runs in your phone’s browser and saves to your home screen. Contacts are encrypted, no one on our team looks at them, and you can export or delete anytime.

Start free with your first 25 contacts and see who comes up first.

See how it works