Seller Financing: Build the Payment Calendar Before Negotiating

List every payment obligation

Include closing cash, senior debt, seller note payments, interest, balloon payments, and any contingent consideration. Confirm the exact proposed dates and terms with transaction professionals. Avoid summarizing a complex structure as one monthly number.

Connect payments to operating cash

Model customer collections, payroll, suppliers, capital needs, and reserves on the same calendar. A business can show annual profit while experiencing a cash shortage in the month a large obligation comes due.

Review lender and document constraints

Ask counsel and the lender about priority, subordination, standby requirements, collateral, guarantees, and default provisions where applicable. The seller proposal must fit the financing and legal documents, not just the buyer preferred cash model.

Test the exit from the structure

If a balloon or refinancing is assumed, model what happens when refinancing is unavailable or expensive. Identify the operating cash needed to reduce that exposure. Do not make a future lender approval the only path to completing the payment plan.

Action checklist

• List exact proposed payment dates
• Include contingent obligations
• Model collections and reserves
• Review lender constraints
• Test balloon and refinance risk

Does seller financing automatically make a deal safer?

No. It changes payment timing and risk allocation. Evaluate the full terms, documentation, and downside cash flow.