Best For
Stable margin businesses where earnings reflect operating performance.
Acquisition tools / 03
Forgivable Seller Note Calculator
Model principal reductions when business performance misses the agreed target.
Deal Parameters
Forgiveness Parameters
- Performance target
- $475,000
- Purchase multiple
- 4.00x
Annual EBITDA Actuals
- Total Forgiven
- $200,000
- Effective Discount
- 40.0%
- Net Cash Out
- $345,056
- Effective Purchase Price
- $1,800,000
- Effective Multiple
- 3.75x
- Year 1 Monthly Pmt
- $9,436
Principal reduction
Off original note
Principal + interest
After forgiveness
vs. avg ebitda
Resets after forgiveness
Annual payment and forgiveness schedule
| Yr | Actual EBITDA | Target | Met? | Beg Balance | Monthly Pmt | Annual Interest | Annual Principal | Forgiveness | End Balance |
|---|---|---|---|---|---|---|---|---|---|
| 1 | $400,000 | $475,000 | NO | $500,000 | $9,436 | $22,950 | $90,278 | $200,000 | $209,722 |
| 2 | $500,000 | $475,000 | YES | $209,722 | $4,830 | $9,383 | $48,574 | − | $161,148 |
| 3 | $500,000 | $475,000 | YES | $161,148 | $4,830 | $6,898 | $51,059 | − | $110,089 |
| 4 | $500,000 | $475,000 | YES | $110,089 | $4,830 | $4,286 | $53,672 | − | $56,417 |
| 5 | $500,000 | $475,000 | YES | $56,417 | $4,830 | $1,540 | $56,417 | − | $0 |
When to Use
Buyer Upside
The seller shares downside when earnings miss the agreed target.
Seller Consideration
The buyer can influence EBITDA through expense and accounting decisions.
Higher Forgiveness Potential
Purchase multiples of 3 to 6x can amplify principal reductions.
The calculators and financial tools provided by The Business Buyer Blueprint are for educational and illustrative purposes only. Forgiveness is modeled at year-end after twelve monthly payments. Actual outcomes depend on negotiated terms, accounting definitions and lender requirements. This is not legal, tax or lending advice. Review any performance-based seller note with qualified professionals.
Protect yourself before you sign.
The 5% Down Financing Kit walks through seller note structures, including how to tie part of the note to the business performing as promised.