Buying a business with seller financing comes down to two questions: is the price fair, and can the business pay for itself? Enter the owner cash flow, the price and how the deal is split between your down payment, a bank loan and a seller note. The calculator checks the price against a fair-value range, tests whether the business can carry the repayments after paying you, shows what the deal is worth to the seller, and writes the offer out for you.
How the calculator works
- Fair value = annual owner cash flow (SDE) × a low and a high multiple. The default range of 2.2× to 3.2× is centred on the 2.7× average in BizBuySell’s Insight Report for Q2 2026.
- The deal is your down payment, plus a seller note, plus a bank loan for the rest. Each loan is repaid in equal monthly instalments over its term. If the seller note has a standby period, no payments are made but interest is added to the balance.
- Debt coverage = (owner cash flow − the salary you need) ÷ the year’s loan repayments, checked for the heaviest year. The default minimum of 1.25× follows the SBA’s SOP 50 10 rule for acquisition loans.
- The highest price the deal supports is the price at which, with the same split and terms, coverage would be exactly at your minimum.
- For the seller, it adds up the cash at closing and the note repayments, and discounts the note at the seller’s required return to show what the deal is worth in cash today.
A worked example
A business with $165,000 of owner cash flow, priced at $445,000 (2.7×). You put down 10% ($44,500), the seller carries 20% ($89,000) at 7% over 5 years, and a bank lends the remaining $311,500 at 10% over 10 years. That is $4,116 a month to the bank and $1,762 to the seller, or $70,546 in year one. After a $70,000 salary, the business leaves $95,000, so coverage is 1.35×, above the 1.25× most lenders want. The same structure would support a price of up to about $479,000. The seller receives $356,000 at closing (80%) and $461,738 in total. Valued at a 10% required return, that is worth about $438,900 in cash today.
What makes a seller-financed offer fair
- A price you can justify. Anchor it to verified owner cash flow and a multiple that fits the business, not to the asking price.
- Repayments the business can carry. If coverage is below about 1.25×, one bad year means you miss payments. A longer seller note or a standby period can fix the timing without cutting the seller’s price.
- A fair return for the seller. A seller who lends you part of the price takes a risk. If the note rate is below what they could earn elsewhere, the financing is costing them money. It is fair to offer a slightly higher price or rate in return for good terms.
- Protection on both sides. Sellers usually ask for a personal guarantee or security over the business assets. Buyers can ask for a handover period, and for the right to offset the note against problems the seller didn’t disclose. Put it in writing, drafted by a lawyer.
Before you make an offer, read how to buy a business with little or no money down, compare business valuation methods, and follow the employee-to-owner roadmap.
This calculator is a negotiation and planning aid, not financial, tax or legal advice. It assumes cash flow stays flat and leaves out taxes, working capital and closing costs. Have an accountant check the seller’s figures (a quality-of-earnings review on larger deals) and a lawyer draft the note.
Frequently asked questions
What is seller financing?
The seller lets you pay part of the price over time instead of all at closing. You sign a promissory note (the “seller note”) and repay it with interest from the business’s cash flow, usually alongside a bank loan. It lowers the cash you need up front and shows the seller believes the business will keep earning.
What is SDE (seller’s discretionary earnings)?
The cash a single full-time owner takes out of the business in a year: net profit, plus the owner’s own salary and benefits, plus one-off or personal expenses run through the business. Small businesses are usually priced as a multiple of SDE. Ask for at least three years of tax returns and accounts, and check the add-backs.
What multiple of SDE is fair?
It depends on how steady, growing and owner-independent the business is. BizBuySell reported an average cash-flow multiple of 2.7× for small businesses sold in the second quarter of 2026. Businesses that rely heavily on the owner, or whose earnings are falling, sell lower; those with recurring revenue and a team in place sell higher. Set the low and high multiples to match the business you are looking at.
What is debt service coverage and why 1.25?
It is the cash the business produces after paying you, divided by the yearly loan repayments. At 1.25× the business earns $1.25 for every $1 of repayments, leaving a buffer for a weaker year. The SBA’s rules for 7(a) acquisition loans (SOP 50 10 8.1) ask for at least 1.25× historical coverage, and many lenders want 1.25–1.35×.
What is a standby seller note?
A seller note on which no payments are made for an agreed period, while interest usually keeps building up. Under SBA rules, a seller note on full standby (no payments for the life of the 7(a) loan) can count towards up to half of the minimum 10% equity injection. The calculator’s standby field lets you see how a payment holiday moves the repayments into later years.
Why would a seller agree to finance the sale?
Offering finance usually brings in more buyers and can support a higher price. The seller also earns interest on the note, and in some countries receiving the price over several years can spread the tax bill (a US seller should ask a tax adviser about installment-sale treatment). In return, the seller takes the risk that the business struggles under the new owner, which is why a fair note pays a fair interest rate.
Is my information stored?
No. Everything is calculated in your browser, and nothing you type is saved on our server or sent anywhere. The share link keeps your figures in the part of the web address after the # sign, which browsers do not send to the website.