During recent Childcare business and freehold negotiations, some purchasers have not been able to secure finance via the traditional bank lending process which has changed significantly after introduction of the new lending regulations in 2022.
Another limiting factor is the high interest rates which have increased the cost of borrowing and mortgage payments.
To overcome this issue, negotiations have been facilitated with Vendor finance, also known as seller financing, to achieve a successful sale.
This involves the seller providing a loan or financing to the buyer, which can make the sale more attractive and accessible to potential buyers. It is something worth exploring, to see if this will assist you in achieving a successful sale or purchase.
Here's how vendor finance can be beneficial in selling a childcare business:
1. Attracting a Wider Pool of Buyers:
• Vendor finance can make the childcare business and/ or property more appealing to a broader range of buyers, including those who may not have access to traditional bank loans or who are looking for more flexible financing options.
2. Faster Sale:
• Seller financing can expedite the sale process because it eliminates the need for potential buyers to secure third party lending if the banks will not fund the full purchase price. This can be time consuming and challenging to achieve depending on the lenders criteria.
3. Increased Trust:
• When sellers are willing to finance a portion of the purchase price, it demonstrates confidence in the business's profitability and may build trust with potential buyers.
4. Smooth Transition:
• Vendor finance can help ensure a smoother transition of ownership. Sellers can stay involved in the business for a short period, if needed, to facilitate the transfer of knowledge and relationships to the new owner.
Vendor financing can be a win-win solution for both buyers and sellers when selling a childcare business and property.
It can help overcome financing hurdles and facilitate a successful transaction.
We are using it more in our negotiations on a case to case basis.
If you wish to explore this further, please make contact with Linda Harley for a confidential chat.
Mobile : 022-3549189