Seller credit and operating principle

Find out how to obtain a seller loan in the context of a business purchase or for the redemption of shares in a partner, a solution often used in the professional context.

Principle of the professional seller loan

Principle of the professional seller loan

The seller loan is quite simply a credit which is granted directly by the seller to the buyer, this can relate to different types of projects: purchase of a business, takeover of a business, repurchase of shares, purchase of professional real estate. The advantage is to be able to define the repayment terms with the seller but also to get out of the traditional banking system, because it is not always easy to obtain a professional loan from the banks. For the seller, the latter can set a slightly higher price, which justifies taking the risk of the seller loan.

The recourse to the seller loan company will often take place when the conditions of repurchase exceed those of the banks, the latter will not wish to follow the candidate for the takeover of the company (or shares, goodwill) and therefore the seller loan will present itself as the solution to complete the transaction. Note that the buyer can accumulate both a seller loan and a conventional professional loan, the idea being to finance the needs according to the solutions available.

How to set up a business seller credit?

How to set up a business seller credit?

The amount of the loan as well as the interest rate and the duration of the credit must be defined by the seller, it is obviously necessary that this remains consistent with the loan conditions of the banks, the buyer could very well not commit on an overly restrictive seller loan. All of this must be formalized in the form of an authentic deed, so a visit to the notary must be provided for the drafting of the deed and fees.for this service. Generally, the notary fees are the responsibility of the buyer, they must be paid at the time of the visit to the notary. Small feature: the seller can decide to set a rate at 0%, the simple fact of setting a higher starting price justifies the establishment of a rate at 0%.

Like any loan, it is also necessary to ensure the repayment of each installment, with borrower insurance. It is therefore necessary to estimate the cost of this cover and take care to select the right guarantees. Seller loan insurance actually covers part or all of the monthly repayment in the event of death, disability or illness. This coverage can be requested from an insurance broker or an insurer directly. In addition, most sellers will require this collateral to make the loan.

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