Why 100% Seller Financing Often Fails

Why are you seeing so many posts about seller financing?

It’s a practice many of us on LinkedIn are pushing back against so people don’t waste their money on courses teaching a method that doesn’t work.

It’s built on assumptions passed off as sound advice by business-buying “gurus” and folks jumping from real estate to business acquisitions.

Below are the common myths and why it rarely makes sense to accept a deal entirely seller-financed.

Myth 1: Paying the owner over time saves them on taxes, and they get interest.

Truth 1: Sale proceeds invested elsewhere would likely outperform any tax savings while giving the seller full control of the funds. Proper planning can lead to significant savings on capital gains as well.

Myth 2: This structure works in real estate, so it should work for small business acquisitions.

Truth 2: In real estate, if a borrower defaults, the property can be sold to recover the debt. In a business, a default often means the buyer is running it poorly—or not at all—leaving no collateral or resale value. This structure turns the seller into a bank, putting their entire retirement at risk.

Myth 3: Brokers force sellers to take cash deals just to get their commissions.

Truth 3: Brokers don’t decide if sellers accept offers—we educate sellers about the risks. A buyer with no experience, no money down, and no personal guarantee is a very high risk. Real buyers make real offers with real down payments.

Would you risk your retirement on a buyer with no experience, no money down, and no personal guarantee? Absolutely not.

If you’re making an offer on a business, always put yourself in the seller’s shoes. Ask, “If I were the seller, what’s good and bad about this offer?”

Most deals I handle include some seller financing—usually around 10%. If the seller defaults on this, most buyers can handle losing 10% of the sale price.

There are rare cases where 100% seller financing makes sense, like with a failing business the owner needs to offload, or an aging business requiring major capital improvements immediately.

Even then, if future payments are owed I’d push for the seller to secure a personal guarantee from the buyer.

Let me know any other myths you see regarding seller financing.