Seller Financing (Vendor Take-Back) Calculator
Work out the vendor take-back portion of a deal — what's left after your down payment and lender financing — and what the seller note costs each month.
How the purchase price is split
- Down payment (20.0%)
- $200,000
- Lender (60.0%)
- $600,000
- Vendor take-back (20.0%)
- $200,000
Price the bank portion of the deal, then check that total debt service still passes the lender's coverage test.
What a vendor take-back is, and why it's common
A vendor take-back (VTB) is seller financing: instead of receiving the full price in cash at closing, the seller accepts a promissory note for part of it and is repaid with interest over several years. In Canadian small business sales a VTB of roughly 10% to 30% of the price is routine, and lenders frequently require one — it keeps the seller invested in a clean handover and in the accuracy of what they represented.
For the buyer it bridges the gap between cash on hand plus bank financing and the asking price, and the rate is usually lower than a term loan. For the seller it widens the buyer pool, often supports a higher headline price, and can spread the tax hit over several years. The trade-off is repayment risk, which is why sellers normally take security and a personal guarantee, and why the bank will postpone the note behind its own loan.
Structure the rest of the deal with the down payment calculator and the business loan calculator, then read our guide to financing a business purchase in Canada.
This tool gives an estimate for planning purposes only and is not financial, tax, or legal advice. Vendor take-back terms vary deal by deal.
Frequently asked questions
A vendor take-back, or VTB, is when the seller accepts part of the purchase price as a promissory note repaid over time instead of cash at closing. The buyer makes payments to the seller, usually with interest, over three to seven years.
Very common — a VTB of roughly 10% to 30% of the price appears in a large share of small business transactions. Lenders often require one, because it keeps the seller financially invested in a smooth transition.
Rates commonly sit between about 4% and 8%, usually below the bank rate, with terms of three to seven years. Some notes are interest-only for the first year, or carry a balloon payment at the end. Everything is negotiable.
Almost always. The lender will require a postponement agreement so the bank is repaid first if things go wrong, and may restrict VTB payments while the term loan is outstanding. Build that into your cash flow plan.
It widens the buyer pool, often supports a higher price, can spread the seller's capital gains tax over several years, and earns interest on the deferred amount. In exchange the seller carries repayment risk, which is why most insist on personal guarantees and security.