Acting as the bank on your own practice sale sounds risky until you see the math. Here's exactly how it works and why it consistently outperforms an all-cash deal.
Seller financing means you accept a down payment at closing and collect the rest as monthly principal-and-interest payments over an agreed term, instead of taking one lump sum.
On a typical deal, a buyer puts down 10–30% at closing, and you carry a note for the balance at an interest rate between 6% and 8%, amortized over 5 to 10 years. The buyer signs a Promissory Note spelling out the payment schedule, and you typically file a UCC-1 financing statement giving you a secured interest in the practice's assets in case of default.
The reason sellers choose this path isn't charity — it's math. Spreading the sale over several years means the interest you collect on top of the principal can push total proceeds well above what a straight cash sale would net, while also spreading your capital gains tax liability across multiple tax years under IRS installment sale rules (IRC Section 453).
Seller financing isn't a concession you make — it's often the deal structure buyers are actively searching for.
Most physician buyers can't write a $1M+ check, and traditional bank underwriting for practice acquisitions is conservative. A seller note fills the gap between what a buyer can put down and what an SBA lender will finance, which is exactly why the SBA itself often encourages seller notes as part of the capital stack.
It also signals confidence. A seller willing to carry paper on their own practice is telling the buyer — and any bank involved — that they believe the business will keep performing after they leave. That confidence materially improves a buyer's ability to get the rest of the deal financed.
A few things to line up before you list, so you're negotiating from a position of strength rather than figuring out terms mid-deal.
Important Disclaimer: The information on this page is for educational purposes only and does not constitute legal, financial, or tax advice. Every practice sale is unique. PracticeAmerica strongly recommends consulting a healthcare M&A attorney, a CPA experienced in medical practice transactions, and a financial advisor before making any decisions regarding a practice purchase or sale.
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