A short advisory YouTube video by Donna Genie explaining seller financing as an alternative when buyers struggle to obtain traditional bank or SBA loans. The video contrasts current SBA/bank loan rates (cited around 10–12% plus fees and lengthy underwriting) with seller-financing examples (seller charging roughly 8%), highlights benefits (monthly income stream, potential to sell at a premium), outlines typical terms (commonly ~5 years with a balloon payment, possible 5-year extensions), and warns about risks (buyer default, need for collateral/liens, foreclosure and reputational/asset-value issues). The video ends with a call-to-action to contact pyopaccounting.com for help selling a studio.
Questions this video answers
About 10–12% (plus additional fees).
Approximately 8%.
About five years with a balloon payment at the end (sometimes extended another five years).
pyopaccounting.com (reach out to us@pyopaccounting.com).
Chapters
Are you considering selling your studio but worried about a buyer being able to get the financing? Well, another option for you to consider is seller financing. It doesn't go without its own risks. So let's talk about the pros and cons of selling your studio with a seller financing option. Initially, the seller reasoning might be that it's very difficult to get an SBA loan or a bank loan traditionally because interest rates are so high. Currently, SBA loans are probably running between 10 to 12% now, plus they tack on a whole lot of fees. And it's a very difficult process to go through the underwriting and takes a long time. So that may be a roadblock in your way. Perhaps you found a buyer, but they can't arrange the financing to get the deal done. Considering seller financing might be a decent option right now with the interest rate situation. If you were to put your money into a CD or a money market, you're not going to be able able to get anywhere near the return on the rate that you would get if you did seller financing. So instead of them paying the SBA or a bank 10, 12%, perhaps you could do seller financing at 8%. That means you get 8% interest as well as the payment on the sale of your studio. You may be able to sell it at a bit of a higher price, at a premium, because you're kind of in charge of the deal and they can't get the deal to work in another way. And it may give you a stream of income, kind of like getting a paycheck every month. What will happen is that the buyer, instead of paying the bank on the note, will pay you. That payment will include interest as well as some of the principal on the sale amount. Typically, we see seller financing deals go out for about five years and then they have a balloon at the end to where the new buyer can by then will have established the credit to be able to go get the money from another source or have built up profits along the way to pay off that note. If they don't and the situation's working out well, sometimes sellers will give them another five years and extend it to keep that deal going on. If everything's going good now, what are the cons of seller financing? What if it goes bad? What if they can't pay you? What if they won't pay you? Well, typically in seller financing, you want to make sure that you have a good enough deal that it makes it very hard for them not to pay you. So you want to have collateral. Perhaps you put a lien on their house, or perhaps you have some other investment funds that you have a lien on, that you have insurance that has a payout, some mechanism to get your money and to have some assets. But in your worst case, what you're going to have to do is foreclose, and that means taking the studio back. Now, they may have done some things that have made your reputation not quite as good as you would want it to be. So that may make it difficult to have value in that asset of taking the studio back. But you could run the studio or you could close it, but you're going to want to make sure that you have a mechanism to get your money. Otherwise you'll be out the money on the sale and take a loss. So take a look. This is a pretty serious consideration to make. I've seen cases where it's worked very well. I've seen other cases where it hasn't worked well at all. If you're considering selling your studio and you want to look at the options or have questions, please let us know. Reach out to us@pyopaccounting.com we are here to work with you. We have some packages to help get you lined up to sell for the most money possible and make sure you understand the value of your business.
