Seller Note
Also known as: Seller Financing, Vendor Note, Seller Carryback
A seller note is financing the seller provides to the buyer, effectively lending part of the purchase price to be repaid with interest over time.
A seller note (or seller financing) is a loan from the seller to the buyer that covers part of the purchase price. Rather than receiving all cash at closing, the seller is paid the note amount over time, with interest.
Why it shows up
Seller notes help bridge financing gaps, especially in smaller deals and for leveraged buyouts by independent searchers where bank debt alone will not cover the price. A seller willing to carry a note also signals confidence that the business can pay it back.
Terms and subordination
Seller notes usually sit behind the senior bank debt, meaning the bank gets repaid first. That subordination makes the note riskier for the seller, which is reflected in its interest rate and terms.