"By far, the vast majority of website purchases are performed via some form of Bank Financing. And very few banks will fund a website acquisition without backing from the Small Business Association (SBA). So, there are various policies that SBA lenders must follow in order to receive backing. And of course, banks also have their own underwriting rules. Most banks will require that the seller of a business underwrite a portion of the sale, so it usually must be a part of the transaction. br br As a Seller of Middle Market tech company, when preparing an exit strategy, it is best to plan on a portion of the sale of your business to come over time, in the form of a promissory note or earn out. It’s important to note that promissory notes between the Buyer and the Seller must take a second security position to any debt financing that might be set forth in a deal, and usually the lender or investor that issues such debt service will prohibit payments on secondary notes for a period of time after the sale. Based on this, when we talk to Sellers about Owner Financing, we generally focus on the following bullet points: br br • Owner Financing is usually a way to make the Buyer feel more comfortable with the transaction because both the Buyer and the Seller have skin in the game. If no Owner Financing were included, the Seller would be less likely to help in times of need. br br • Owner Financing is a good way for Buyers to minimize the down payment so that the business can pay for as much of the purchase price as possible over time. And by having extra cash on hand, it is easier to deal with hard times where cash flow might be tighter. br br • Owner Financing is oftentimes a negotiable touch point in transactions and usually will have an effect on the overall purchase price. The Percentage of Owner Financing in a deal can cause a purchase price to fluctuate during negotiations since the Owner is taking on additional risk. br br • Owner Financing can sometimes be a good thing from a tax standpoint. It is usually a good idea to talk to a tax professional to identify what, if any, tax-related benefits could potentially arise from owner financing a portion of the purchase price. br br There are a number of ways for owners to finance a portion of the sale of their own business, but the most common are promissory notes, earn outs and escrow arrangements. br br Promissory Notes are the most common. Negotiated terms are usually focused on the timing of the payback period, the interest rate and other terms generally associated with any business loan. Clearly, the more that is financed via a Promissory Note, and the longer the payback period, the more risk involved. But when a business is difficult to sell, whether due to purchase price constraints or other issues, Owner Financing can sometimes be the difference between a successful sale and an unsuccessful one.