Acquisition tools / 04

Seller Financing Advantage Calculator

Compare buyer costs and seller proceeds with a price premium and a lower financing rate.

Deal Parameters

Purchase PriceDown Payment %Loan Term yearsSBA Interest Rate %

Seller Financing Parameters

Price Premium %Seller Financing Rate %

Tax Parameters

Capital Gains Tax Rate %Ordinary Income Tax Rate %

Traditional Cash / SBA Sale

Buyer Side

Purchase Price: $2,000,000
Down Payment: $100,000
Financed Amount: $1,900,000

Interest Rate10.00%

Monthly Payment: $25,109
Total Loan Payments: $3,013,037
Total Interest Paid: $1,113,037
TOTAL BUYER COST: $3,113,037

Seller Side

Total Principal Received: $2,000,000
Total Interest Received: $0
Gross Total Received: $2,000,000
Capital Gains Tax: $476,000
Interest Income Tax: $0
Total Taxes Paid: $476,000
NET AFTER-TAX PROCEEDS: $1,524,000

Seller Financing

Buyer Side

Purchase Price: $2,530,000
Down Payment: $126,500
Financed Amount: $2,403,500

Interest Rate4.00%

Monthly Payment: $24,334
Total Loan Payments: $2,920,112
Total Interest Paid: $516,612
TOTAL BUYER COST: $3,046,612

Seller Side

Total Principal Received: $2,530,000
Total Interest Received: $516,612
Gross Total Received: $3,046,612
Capital Gains Tax: $602,140
Interest Income Tax: $191,147
Total Taxes Paid: $793,287
NET AFTER-TAX PROCEEDS: $2,253,326

Seller Financing Advantage

$729,326

+47.9% more after taxes

Tax Arbitrage

The model taxes sale principal at 23.8% and note interest at 37.0%. The difference is 13.2 percentage points. Cash-sale principal uses the same capital gains rate, so this is not an additional tax break exclusive to seller financing.

Lower Buyer Payments

Monthly payment changes from $25,109 (SBA) to $24,334 (seller financed). That's $774 less per month with a 26.5% price premium.

Interest Savings

Total interest changes from $1,113,037 to $516,612. That's $596,425 less interest. The seller receives note interest directly and $530,000 in additional principal.

Seller note amortization

Loan Amount: $2,403,500
Monthly Payment: $24,334
Total Interest Collected: $516,612

The calculators and financial tools provided by The Business Buyer Blueprint are for educational and illustrative purposes only. This simplified model assumes the entire purchase price is taxable capital gain, with no tax basis, asset allocation or depreciation recapture. It assumes every payment is collected and does not discount future receipts to present value. Actual tax treatment, installment-sale eligibility, SBA terms and payment risk vary. Consult qualified tax, legal and lending professionals.

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Put seller financing to work on your deal.

The 5% Down Financing Kit shows how to structure a seller note so it counts toward your down payment, plus the tools to test the deal.

Get the Financing Kit