Free calculator
Seller note calculator
- Monthly payment
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- Annual note service
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- Balloon due
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- Total interest paid
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- Combined annual debt service
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Arithmetic on the terms you enter, not an offer or a lending decision. It does not model subordination, standby requirements, setoff rights, or what your senior lender will permit — all of which change whether a note like this is financeable at all.
The number that matters is the combined one
Buyers evaluate a seller note on its rate, which is usually attractive. Lenders evaluate it on what it adds to total debt service, which is what determines whether the business still covers its obligations.
That is why the combined figure is the headline output here. Take it to the affordability calculator as the annual debt service and see whether the coverage ratio still clears. A note that makes the deal affordable on paper and unfinanceable in underwriting has not helped you.
The balloon is a refinancing event
Most seller notes amortise over a longer period than they run for — a ten-year schedule with the balance due in five, say. The monthly payment looks like a ten-year payment. The balance at year five is real money, and paying it means refinancing at rates nobody can predict today.
If the balloon is a large share of the original principal, you have not financed the purchase so much as postponed part of it. Either lengthen the term, or plan the refinance now while you can still negotiate the terms of the note.
What this deliberately leaves out
The arithmetic is the easy part. What decides whether a note like this survives is structural, and none of it appears above:
- Subordination. Your senior lender will have views on where this note ranks and whether it can be paid at all while their loan is outstanding.
- Standby terms. A note may be required to be on full or partial standby, which changes the payment schedule you just modelled.
- Collateral and setoff. What secures the note, and whether you can withhold payments against a warranty claim.
All of it belongs in the seller-financing guide, and all of it should be raised with your lender before you agree terms with the seller rather than after.
Frequently asked questions
Why is a seller note useful beyond the cheap rate?
Because it keeps the seller economically invested in a clean transition. Someone still owed a substantial sum has a practical interest in customers staying, staff staying and the handover working. That alignment is often worth more than the interest saving.
Will my SBA lender allow a seller note?
Frequently yes, on their terms — which commonly involve subordination and may involve standby requirements that change or suspend the payments. Those terms are the lender\u2019s to set, so agree the note in principle and confirm the structure with the lender before it is documented.
What happens at the balloon if I cannot refinance?
That is the risk the calculator is designed to make visible. Options narrow to refinancing on worse terms, renegotiating with the seller, or selling. None of them are good under time pressure, which is why the balloon belongs in your model from the first day rather than in year four.
Is interest-only at the start a good idea?
It protects cash flow in the year you are least able to predict it, which has genuine value. It also means the principal is untouched when the amortising period begins, so the later payment is higher and any balloon is larger. Model both and decide with your eyes open.
Educational only — not a valuation, a loan pre-approval, or a lender's number. Confirm specific rules, rates, and forms with the relevant New York State agency, attorney, CPA, lender, or insurer before acting. The formulas behind this tool are documented on the methodology page.