Short answer
- SBA loans run about prime plus 3% for up to 10 years; seller notes commonly 6% to 8% over 3 to 7 years.
- Most deals combine them; a seller note counts as equity only on full standby.
- Model cash flow both ways before you choose.
Side by side
| SBA 7(a) loan | Seller financing | |
|---|---|---|
| Rate | Prime plus up to 3% on larger loans; about 10% with prime at 7.00% (Oct 2026) | Commonly about 6% to 8% |
| Term | Up to 10 years for business assets; up to 25 years for real estate | Commonly 3 to 7 years, 5 most common |
| Share of price | Most of it, after 10% equity | Commonly 10% to 30% |
| Requirements | Independent valuation, 1.25x coverage, personal guarantee, U.S. citizen or national owners | Whatever buyer and seller agree |
| Costs | Guaranty fee, lender and closing costs | Attorney time; Florida doc stamps |
| Speed | Weeks to months of underwriting | As fast as the lawyers |
Most deals use both
The common structure for Florida businesses under about $5M is an SBA loan for most of the price, the buyer's cash, and a seller note for the rest. Two rules matter:
- A seller note counts toward the buyer's 10% equity only if it's on full standby: no principal or interest payments for the life of the SBA loan, usually about 10 years. It can cover at most half of the required equity, combined with small minority investors.
- A seller note that pays during the SBA loan is extra debt. It has to fit within the 1.25x coverage test, and its payments are imputed over a 10-year amortization if they're interest-only.
For sellers
A standby seller note is a 10-year bet on the buyer. Price it accordingly, ask for interest to accrue, and get the subordination terms reviewed by your attorney. A seller note outside the SBA structure, paying from day one, is usually a better deal for you if the buyer's coverage supports it.
For buyers
Seller financing is cheaper and faster, and a seller who carries paper believes in the business. But a seller-only deal with a large note and a short term can strain cash flow more than a 10-year SBA loan. Model both. My SBA calculators show the coverage either way.
When pure seller financing makes sense
- Small deals where SBA costs and paperwork outweigh the benefit.
- Buyers who don't meet SBA requirements but are a strong fit, like a long-time employee.
- Businesses that won't appraise at the price, where the seller bridges the gap.
FAQ
What is a typical seller financing interest rate?
Commonly about 6% to 8%, over three to seven years, with five years most common. Notes on full standby behind an SBA loan often accrue at lower rates.
Can you combine an SBA loan with seller financing?
Yes, and most deals do. A seller note on full standby can count for up to half of the buyer's 10% equity; a paying seller note is extra debt that must fit the 1.25x coverage test.
Sources
- Seller note rates and terms (Clearly Acquired)
- SBA SOP 50 10 8.1 summary (Accredited)
- Prime rate (FedPrimeRate)
This guide is general information, not legal, tax or lending advice. SBA rules and Florida law change; confirm current terms with your lender, attorney and CPA.