Seller financing — also called an owner-carried note or seller note — occurs when the seller of a business accepts a promissory note for a portion of the purchase price rather than requiring all cash at closing. The buyer makes monthly payments (principal plus interest) to the seller over a defined term, typically 3–7 years.
Why Sellers Offer Financing
Sellers provide financing to expand their buyer pool (reaching buyers who cannot fully finance the purchase through third-party lending), signal confidence in the business's future performance, and earn interest income above what they might receive from other investments. For SBA transactions, seller notes on standby may be required to make the deal structure work within SBA guidelines.
How Seller Notes Are Structured
A seller note typically specifies: principal amount, interest rate (typically 5–8% for small business notes), repayment term, monthly payment schedule, security (collateral — often the business assets through a UCC lien), personal guarantee (the buyer personally guarantees the note), and subordination provisions if SBA or bank financing is also present.
The seller note should always be documented by a business attorney — not just a handshake agreement. Proper documentation with security provisions gives the seller meaningful recourse in the event of default. An unsecured seller note to a buyer who defaults is essentially an uncollected debt with limited recovery options.
Recast Seller’s Discretionary Earnings, then apply a planning multiple for this Illinois business. Replacement labor is subtracted. This is a planning tool, not an appraisal.
Before debt, working-capital peg, holdback, and tax. Educational only.
What this Illinois guide is for
What Is Seller Financing and How Does It Work? is a working answer for owners and buyers. We will not invent a statewide average sale price. We will show the earnings math, the Illinois clocks that delay a close, and the questions a serious counterparty will ask.
Marketplace context from BizBuySell’s Q2 2026 Insight Report (median reported sale $349,250, 2.7× cash-flow multiple, 14% of owners with a professional valuation) is context — not your quote.
Documents to gather this week
- Three years of signed business tax returns and matching P&Ls
- Year-to-date P&L, balance sheet, and three months of bank statements
- Current lease, amendments, and a plain-English remaining term
- License and permit list, including who holds each card
- Top-customer concentration (names redacted until an NDA)
A simple Illinois close calendar
Plan six to twelve months from cleanup to close on a prepared Main Street deal. Start CBS-1 and any Chicago or Cook notices at letter-of-intent, not the week of funding. Landlord consent often takes longer than the lender.
Related pages on this site
Educational only — not legal, tax, or a formal appraisal. Confirm bulk-sale notices, licenses, and tax allocation with counsel and a CPA.
Questions
No. This is education and planning math. A professional opinion of value is a confidential conversation. We work on a success fee if you engage a sale process. There is no file-upload portal.
Start with adjusted seller’s discretionary earnings, then a vertical planning band. A marketplace average is context, not your quote.
Personal professional licenses do not transfer. Municipal registrations and state notices have their own calendars. Confirm the path before you grant exclusivity.
Most prepared Main Street sales take about six to twelve months from cleanup to close. License transfers, landlord consent, and SBA underwriting add weeks.
CBS-1 is the Illinois bulk-sale notice. File it at least ten business days before an asset transfer that meets the statute. Late filing can put Illinois tax risk on the buyer.