If you’ve sold your business with a payment plan, you probably already know the risks. It’s common for a seller to be hesitant about using seller financing. After all, what happens if the buyer can no longer make payments? This is a real situation with real consequences. If you’re dealing with a situation where the buyer stopped paying, you do have options. Here is what to do in this situation.
Why Use Seller Financing
If you are confident in your business’s success in someone else’s hands, it makes sense to offer them a payment plan. If you believe in the capability for the business to grow and earn a profit, then you have more confidence that you’ll receive your money back. Generally, seller financing benefits the buyer the most. Seller financing allows the buyer to buy a larger business without putting as much money down.
Risks to Seller Financing
Of course, for the seller, there are major risks. If a buyer defaults on a loan, then forcing the buyer to pay can be expensive. The seller cannot be sure that the buyer is going to make good decisions and sense there is no collateral, the seller runs the risk of losing money and assets. The seller has to consider how they can enforce the payments. If your buyer stops paying you have to fight it.
Default on Payments
If the buyer stops paying payments, then you have to enforce the payments. In some cases, this might mean that you have to take it to court. You can file lawsuits and fight for the payment. Sometimes, you may even fight to win your business back. Whenever someone defaults on what they owe you, you should contact a lawyer right away. A lawyer will help run you through your options. One of these options is to file a lawsuit.
If you sell your business and enter into a payment plan, then the seller has to pay you. If the buyer cannot afford to make the payments, then you have to be willing to fight for your money and for your business. There is a lot of risk involved when it comes to selling a business on a payment plan. If you’re considering selling your business or if you’re already dealing with this situation, you might want to contact a lawyer for extra help in dealing with the next steps. Talk to a business lawyer in Melbourne, FL today about what to do when the buyer stops paying.
Thanks to The Law Offices of Arcadier, Biggie & Wood for their insight into business law and selling a business with a payment plan.