I'm Beau Eckstein, and on the Investor Financing Podcast I walk buyers and aspiring owners through financing strategies that actually get deals closed. In this post I break down one of the most powerful combinations I talk about on the podcast: seller financing paired with an SBA loan. If you're serious about buying a business, this combination—explained by the way I discuss it on the Investor Financing Podcast and in my role as a Business Ownership Coach | Investor Financing Podcast—can lower your out-of-pocket costs, reduce monthly payments, and make otherwise borderline deals feasible.

What is seller financing in the context of buying a business?

Seller financing means the seller of the business agrees to carry a portion of the purchase price as a loan to the buyer. Unlike many hot real estate markets where seller carry is rare, in business acquisitions it’s common. For example: a seller lists a business for $1,000,000. A buyer may put in 10% equity ($100,000), secure $700,000 from an SBA lender, and have the seller carry back $200,000. That carryback is a promissory note from the buyer to the seller with negotiated interest and terms.

As a Business Ownership Coach | Investor Financing Podcast, I help buyers see that seller financing is flexible. The seller and buyer can agree on interest rates below current SBA rates, deferred payment schedules, or standby notes that postpone payments for a number of years. Those options directly affect monthly cash flow and the buyer’s working capital.

How seller financing works with an SBA loan (simple example)

Let's simplify it with a concrete example I like to use on the Investor Financing Podcast and when coaching clients as a Business Ownership Coach | Investor Financing Podcast: you’re buying a $1,000,000 business. Typical SBA structure requires a 10% equity injection, so $100,000 from you. If the SBA will loan $700,000, the seller can carry $200,000.

If SBA rates are at 10%, but the seller is willing to carry at 6%, your blended payment is lower than if the entire debt were at 10%. In another scenario the seller might also carry up to 5% of the equity injection as a standby note. That means you only come to the table with $50,000 instead of $100,000, because the seller’s standby covers the other $50,000 with payments deferred—often for the life of the SBA loan or another agreed period.

So you could structure the deal like this: $100,000 buyer down, $700,000 SBA loan, $200,000 seller carry at a lower rate; OR $50,000 buyer down, $700,000 SBA loan, $50,000 seller standby (no payments for a period), and $200,000 second seller note. The goal is to create a payment profile that the business cash flow can handle while giving the seller a piece of the sale price over time.

Deal structuring strategies: carrybacks, standby notes, and blended rates

Structuring these deals is all numbers—and negotiation. There are a few common tools I outline for buyers and sellers:

• Carryback note: Seller lends a portion of the purchase price at a negotiated interest rate and payment schedule.
• Standby note: Seller carries part of the required buyer equity but defers payments for a fixed period (e.g., no payments for 10 years). This reduces initial cash outlay.
• Second note: A separate seller note that may have a different rate, term, and amortization than the SBA loan.
• Blended payments: By varying rates across debt pieces (SBA vs seller carry), buyers can lower monthly debt service during ramp-up.

An important caveat: for deals over $250,000, SBA lenders typically require a third-party valuation. The SBA will base the loan on the valuation (often the lower amount), not necessarily the negotiated purchase price. That doesn't stop a seller from carrying the difference, but you must ensure the overall capital stack still makes financial sense.

Why sellers agree: taxes, favorable terms for employees, and risk sharing

Sellers often say yes to a carryback for a few reasons I cover on the Investor Financing Podcast and in my Business Ownership Coach work. First, tax treatment: an installment sale lets the seller spread capital gains tax across years instead of paying everything in one year. That can be a major motivation.

Second, sellers sometimes want to help an employee or a long-term manager buy the business and will offer favorable financing to make the transition smooth. Third, sellers can retain some upside and reduce the immediate need to find a buyer willing to pay full cash at closing. They get cash today (often a significant lump sum), plus steady installment income.

From a buyer perspective, you get a partner in the exit process. The seller’s incentive to see the business succeed post-sale can align interests and reduce transition risk. But remember: seller carrybacks are additional debt obligations for the buyer, so they must be modeled into cash flow projections and exit plans.

Key benefits for first-time buyers

If you're a first‑time buyer, combining seller financing with an SBA loan offers three big advantages I always emphasize as a Business Ownership Coach | Investor Financing Podcast host:

1. Reduced out-of-pocket cash — Standby notes and seller carrybacks can lower how much you need at closing.
2. Smoother monthly payments — Blended rates and deferred payments help preserve working capital while you learn the business and stabilize revenue.
3. Deal feasibility — Some transactions simply won’t work with bank financing alone. A seller willing to carry part of the purchase price often converts a “no” into a “yes.”

Additionally, seller financing can provide transition support: the seller stays invested in the business’s success until their note is paid. That hands-on help can be invaluable, especially when you don’t yet know the industry’s nuances or the customer base.

Practical next steps: how to explore SBA + seller financing

Ready to explore whether this strategy fits your acquisition? Here’s a practical road map I recommend when working with a Business Ownership Coach | Investor Financing Podcast:

• Run initial cash flow projections including the SBA loan, seller carry, and any standby notes.
• Confirm valuation expectations—SBA lenders will require a third-party valuation for deals over $250,000.
• Talk to the seller early about willingness to carry part of the price, rates, and any standby periods.
• Engage an experienced SBA lender or advisor who understands how seller carries interact with SBA underwriting.
• If you want help, schedule a call with an advisor who can model scenarios and negotiate terms. (You can book a consultation through my site.)

I’ve coached buyers through hundreds of these structures and, from my perspective as a Business Ownership Coach | Investor Financing Podcast host, the combination is one of the most practical ways to bridge the gap between what buyers can borrow and what sellers want.

Final thoughts

Seller financing plus an SBA loan can be the exact structure that changes a deal from impossible to achievable. It’s flexible, it reduces strain on working capital, and it creates alignment between buyer and seller—if you model the numbers correctly and get the documentation in place. As you evaluate opportunities, remember the three keys: make sure the debt service is sustainable, verify valuation expectations, and negotiate terms that protect both parties.

If you want help modeling a specific acquisition or want to know how a seller carry would affect your monthly payments, schedule a call and let's walk through it together. As your Business Ownership Coach | Investor Financing Podcast, I’m here to help you build smarter deals, not just work harder.