Built on IRS Rev. Rul. 2026-19, SBA SOP 50 10 8.1 and IBBA Q2 2026
Seller Financing Calculator with Balloon Payment for Buying a Business
Enter the price, the share the seller carries, the rate and the term, and the calculator shows the monthly payment on the seller note, any balloon payment, the total interest and the cash you need at closing. It also checks your rate against the October 2026 applicable federal rate, the IRS minimum, and compares the note’s size with what brokers reported in IBBA’s Q2 2026 Market Pulse, where seller financing was 6% to 11% of deal value.
MRR, churn and growth verified before listing · data room on request · no buyer success fee · from $99 a month
Monthly payment
Balloon due
Total interest
Cash at close
Year by year schedule
| Payment year | Paid | Interest | Balance |
|---|---|---|---|
Educational estimate · monthly compounding, our math · not tax, legal or lending advice
Most seller notes on small business sales run 5 to 7 years at 8% to 10%, according to BizBuySell, and they sit behind a bank or SBA loan. That second position is what makes the structure matter. A balloon lowers the monthly payment but leaves a lump sum to refinance. A standby period helps an SBA loan close but lets interest pile up. The calculator shows both before you put either in a letter of intent.
Buyouts is a marketplace for AI SaaS businesses with verified metrics. Buyer membership costs $99, $299 or $899 a month and there is no buyer success fee. We do not lend, hold notes or collect payments; the note is between you and the seller.
The listings, metrics and deals shown across this site are illustrative product UI. The calculator is an educational estimate using monthly compounding and is not tax, legal or lending advice. Have deal counsel draft the promissory note, security agreement and any standby agreement.
A seller carries part of the price when they believe the earnings. Verified numbers are what make a seller say yes to a bigger note, a lower rate or a longer term.
Read from each source directly, 9 October 2026
What each source says a normal seller note looks like
Seller note terms are negotiated, so there is no single rate card. These are the sources a buyer, seller or lender is likely to cite, and they do not all agree.
Swipe to see every column →
| Source | Share of the price | Term | Rate | Date read |
|---|---|---|---|---|
| IBBA and M&A Source Market Pulse | 11% under $500K, 6% to 9% from $500K to $50M (share of all deal value) | Not reported | Not reported | Q2 2026 highlights |
| BizBuySell learning center | “A third or more” of the price | 5 to 7 years | 8% to 10%, and elsewhere in the same article “the same or lower than bank prime” | Read 9 Oct 2026, undated |
| Flippa seller financing calculator | A “proportion” of the price; example 30% | “Typically between 1-5 years” | Example 6% | Wayback capture 30 Jan 2026 |
| IRS, Rev. Rul. 2026-19 | No limit | Sets which rate applies | Minimum 4.25% to 3 years, 4.61% to 9 years, 5.22% beyond (annual) | October 2026 |
| SBA SOP 50 10 8.1 | Full-standby note may cover up to half the 10% equity injection | No payments for the whole 7(a) term if counted as equity | May accrue while on standby | Effective 1 Oct 2026 |
| Buyouts | Negotiated between buyer and seller | Negotiated | Negotiated | Verified MRR, churn and growth on every listing |
The sources look contradictory and mostly are not. IBBA averages across every deal its brokers closed, including the many with no seller note at all, so 6% to 11% of total deal value is consistent with a third of the price on the deals that do use one. BizBuySell does contradict itself on rate: it gives 8% to 10% and, a few paragraphs later, says seller rates are usually the same as or below bank prime, which is 7.00% since 17 September 2026. In our reading the 8% to 10% figure is closer to what buyers actually sign, because a subordinated note is riskier than the senior bank loan and is usually priced above it.
Our own math on a $200,000 note at 7%, labeled as such
What the same seller note costs under six structures
Our arithmetic, not a quote. Monthly compounding; interest during standby accrues and is added to the balance. Same $200,000 note at 7% in every row, which is close to the bottom of BizBuySell’s 8% to 10% range and above every October 2026 AFR.
Swipe to see every column →
| Structure | Monthly payment | Balloon | Total interest |
|---|---|---|---|
| 5 year full amortization | $3,960 | None | $37,614 |
| 7 year full amortization | $3,019 | None | $53,557 |
| 10 year amortization, balloon at 3 years | $2,322 | $153,861 | $37,459 |
| Interest only for 3 years | $1,167 | $200,000 | $42,000 |
| 24 month standby, then 5 years | $4,554 | None | $73,210 |
| SBA full standby for a 10 year loan, then 5 years | $7,959 | None | $277,524 |
Two rows deserve a second look. The balloon structure has the lowest regular payment of any amortizing option, but at month 36 you owe $153,861 in one payment, which in practice means refinancing it or selling. And the full SBA standby row shows why sellers resist it: with interest accruing for ten years the balance roughly doubles before the first payment. Many SBA standby notes accrue at a lower rate or not at all for exactly that reason, which you can test by lowering the rate in the calculator.
A seller note is only as safe as the cash flow behind it
The payment the calculator shows has to come out of the business every month, on top of any bank loan. That is why an SBA lender adds a seller note that is not on standby to the debt service it tests at 1.15 times cash flow, and why a seller who carries part of the price will ask to see the same numbers the bank sees.
So the note is not really a negotiation about rate. It is a negotiation about how much the seller believes the earnings. A seller who trusts the revenue will carry more of the price for longer, and a buyer who has verified that revenue can ask for it with a straight face. On Buyouts every AI SaaS listing has MRR, ARR, growth and churn checked against the billing system before it goes live, which is the evidence both sides need before anyone signs a promissory note.
Side by side
Buying with verified metrics against a seller note on trust
A fair look at what each does well. Both are useful. Here is where they differ.
| Feature | Buyouts | A seller note on unverified numbers |
|---|---|---|
| What the seller is relying on | MRR, ARR and churn checked against billing | The seller’s own spreadsheet |
| Leverage to ask for a larger note | Strong, the numbers are already proven | Weak, the seller prices in the doubt |
| Cost to the buyer | $99 to $899 a month, no success fee | Interest on the note plus legal fees |
| Works alongside an SBA loan | Yes, lenders ask for the same metrics | Only on standby if it counts as equity |
| Lends you money | No. We do not lend or hold notes | Yes, the seller does |
| Protects you after closing | No, it protects you before you sign | Partly, a right of offset can be negotiated |
Comparison reflects general, publicly understood positioning. Capabilities change, so check each marketplace for the latest. Trademarks belong to their owners.
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How to calculate a seller financing payment
A seller note is a normal amortizing loan. Take the amount the seller carries, the annual rate divided by 12, and the number of monthly payments, and the standard loan formula gives a fixed payment that covers interest and principal. A $200,000 note at 7% over seven years is $3,019 a month. Over five years it is $3,960. Three choices change the picture. A balloon keeps a long amortization for the payment but makes the rest due early, so the monthly figure drops while a lump sum appears at the end. Interest-only payments keep principal untouched until maturity. A standby period defers payments altogether, and if interest accrues during it, the balance you start repaying is larger than the note you signed. Run the payment against the business, not your salary. Add the seller note payment to the bank loan payment and compare the total with the business’s annual cash flow. SBA lenders want at least 1.15 times coverage on historical cash flow, and a seller should want the same cushion before agreeing to wait for their money.
Seller financing terms for a business purchase
BizBuySell describes typical seller notes as 5 to 7 years at 8% to 10%. Flippa’s calculator page says “typically between 1-5 years”, which fits the smaller online businesses sold there. On the share of the price, BizBuySell says sellers “typically finance a third or more”, while IBBA’s Q2 2026 Market Pulse shows seller financing at 11% of total deal value under $500,000 and 6% to 9% in the larger bands. The difference is mostly that IBBA averages in the deals with no note at all. Beyond rate and term, the note has a few clauses that matter more than they look. Security: whether the seller takes a lien on the business assets, usually second behind the bank. Guarantee: whether you sign personally. Prepayment: whether you can pay it off early without a penalty. Offset: whether you can deduct proven indemnity claims from note payments, which is often the cheapest protection a buyer has after closing. And default: how many days late before the whole balance comes due. A seller with confidence in the business will usually trade rate for term or size. A seller who is not sure of the numbers will want a short note, a high rate and a personal guarantee.
The IRS minimum interest rate on a seller note
A seller note can carry any rate the parties agree, but the IRS sets a floor for tax purposes. Under sections 483 and 1274, a note that charges less than the applicable federal rate has part of each payment treated as interest anyway, which the seller then reports as ordinary income instead of capital gain. The rate depends on the term. For October 2026, Rev. Rul. 2026-19 sets the annual-compounding AFR at 4.25% for notes of three years or less, 4.61% for over three years up to nine, and 5.22% for longer notes. The monthly-compounding equivalents are 4.17%, 4.52% and 5.10%. The calculator picks the right bracket from the total term, including any standby. In practice the AFR is rarely the binding number. A subordinated seller note is riskier than the senior bank loan, so most land well above it. The floor matters mainly for family deals and generous sellers who want to charge little or nothing, and we cover the details in our guide to the seller note interest rate.
Seller notes on an SBA-financed acquisition
SOP 50 10 8.1, in force for SBA loans from 1 October 2026, treats a seller note in one of two ways. If the note is subordinated and on full standby, meaning no principal and no interest is paid for the entire term of the 7(a) loan, it can count as part of the buyer’s equity injection. For a first acquisition the injection is 10% of the project cost, and limited sources such as standby debt can supply no more than half of it. Interest may accrue on the standby note and be paid off after the SBA loan is repaid, documented on SBA Form 155. If the note is not on standby, it is simply more debt. The total debt behind the purchase, including that seller note, cannot exceed the business valuation and has to be covered by the business’s cash flow. If the note is interest only, the lender must test it as if it amortized over no more than ten years. Seller earnouts are prohibited on SBA deals, so a seller note is often how the parties bridge a price gap instead. One more rule rewards patience. A seller note from the acquisition can be refinanced into a new SBA loan once it has been in place and current for 36 months, provided the refinance cuts the payment by at least 10%. That is a real exit for a balloon note.
Why the seller’s confidence decides the note
Every term in a seller note is a price for risk. A seller carrying 30% of a sale for seven years is betting that you will run the business well enough to pay them, and that the revenue they sold you is real. If they are not sure, they protect themselves with a shorter term, a higher rate, a balloon that forces you to refinance quickly, and a personal guarantee. The buyer’s best argument is evidence. When the recurring revenue, churn and growth have been checked against the billing system, a seller has less reason to fear that the business will shrink after closing, and more reason to carry a larger note on easier terms. That is the logic behind Buyouts: every AI SaaS listing shows verified MRR, ARR, growth and churn before an offer is made, so both sides negotiate the note from the same facts.
Keep reading on the parts of a deal this page touches: the seller note interest rate and the IRS minimum AFR, the SBA standby seller note and Form 155, the business acquisition loan calculator for the bank side of the deal, how the seller is taxed on an installment sale, earnouts, the other way to defer part of the price, the escrow holdback calculator, SBA loans to buy a business, the top SBA lenders for acquisitions by state, buying a business with little money down.
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Seller financing calculations, answered
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Listing figures are published by their sellers and self-reported · valuation content is educational, not a guaranteed sale price or return · trademarks belong to their owners