Sanchez: Use Seller Financing to Acquire With Little of Your Own Cash

intermediate6 min read · updated 2026-06-20

As taught by Codie Sanchez (Contrarian Thinking, 'Main Street Millionaire') · source

Sanchez: Use Seller Financing to Acquire With Little of Your Own Cash

The lesson, in my words

Codie Sanchez built her wealth not by founding companies but by buying ones that already work — laundromats, car washes, HVAC and plumbing shops, the unglamorous "boring businesses" that throw off cash every month. The single idea that makes that strategy reachable for normal people is seller financing: instead of borrowing the purchase price from a bank, you let the seller be the bank. They hand you the keys today, and you pay them back out of the profits the business produces — usually over two to five years.

The reframe is everything. You are not trying to scrape together a lump sum to hand over at closing. You are negotiating a structure where the asset pays for itself. The seller's payout comes from future cash flow that the business was going to generate anyway. Your own cash becomes the smallest piece of the stack, not the whole stack.

Why sellers say yes (this is the part beginners miss)

Seller financing is not charity, and it is not a trick you pull on a naive owner. It is often the better deal for the seller, which is why it closes:

• It widens the buyer pool. A retiring owner of a 36207130-business market is competing for a small number of buyers who have both the operating skill and a full bank-approved war chest. Offer to carry paper and suddenly you are a viable buyer.
• It often means a higher headline price. Sellers will frequently accept a bigger total number in exchange for getting paid over time rather than demanding every dollar at close.
• Taxes. Spreading the payout across years can soften the tax hit of a single all-cash sale (the seller should confirm specifics with their own CPA).
• It signals confidence. A seller who has carried a note has skin in your success — and a buyer willing to tie payments to the business's performance is telling the seller the numbers are real.

The macro tailwind is real: an estimated 10000000 boomer-owned businesses are expected to change hands as that generation retires, and McKinsey pegs roughly 6 million SMB transitions by 2035 at up to 5000000000000 in enterprise value. There are far more sellers who need an exit than there are all-cash buyers — which is exactly the leverage seller financing exploits.

How to apply it — a working structure

A seller-financed deal almost never means literally zero of your money. Sanchez's point is that you can make your cash the small line, not the big one. Here is how to put it to work:

• Find a real, profitable, owner-operated business in a category that survives recessions (essential services, repeat customers). Aim for steady cash flow, not hype.
• Anchor the price to cash flow. Most main-street deals trade on a multiple of SDE / owner earnings. Underwrite the deal so that, after the note payment, the business still cash-flows for you. If the payment eats all the profit, the structure is wrong.
• Ask the seller to carry a note. A common ask is for the seller to finance a large slice of the price — sometimes the majority — with you covering the rest in cash, an earn-out, or a small bank loan. Everything is negotiable: down payment, term, interest, and whether early payments are interest-only.
• Tie payments to performance where you can. Earn-outs (payments contingent on the business hitting agreed numbers) protect you if the seller oversold the books and reassure the seller you believe the numbers.
• Stack a lender on top if it helps. Seller financing pairs naturally with an SBA 7(a) acquisition loan — but know the current rules (next section) before you promise the seller anything.
• Paper it properly. A promissory note, security agreement, and personal guarantees are standard. Use an attorney; a handshake "I'll pay you back" is not a deal.

The 2025 SBA rule you must know if you stack a bank loan

If you combine seller financing with an SBA 7(a) loan to lower your cash even further, the rules changed materially under SBA SOP 50 10 8, effective June 1, 2025:

• The SBA expects a minimum 10% total equity injection on an acquisition.
• A seller note can count toward that injection — but only if it is on full standby for the entire loan term (no principal or interest payments while the SBA loan is outstanding), and it can cover at most 50% of the required injection (i.e., about 5% of the 10%). The rest must be the buyer's own verified cash.
• This is a tightening from the prior 24-month standby flexibility. (See Pioneer Capital Advisory for the mechanics of full-standby notes.)

Translation: "zero down" via the SBA route is harder than it was, but a low-cash deal — your skin plus a standby seller note — is very much alive. And a pure seller-financed deal outside the SBA system has no such equity-injection floor; the terms are whatever you and the seller agree to.

What this is not

It is not free money, it is not a way to buy a business you can't operate, and it is not a license to skip diligence. Seller financing lowers the cash barrier, not the competence barrier. The note still has to be paid — by the business, by you, or both. Run the books, verify the cash flow, and structure the payment so the asset can carry it. Do that, and you can own a real cash-flowing business with a fraction of the capital the all-cash buyer brought to the table.

Attribution: This entry distills the seller-financing philosophy popularized by Codie Sanchez of Contrarian Thinking and her book "Main Street Millionaire." Written in our own words; deal structures and figures are sourced above. This is education, not financial, legal, or tax advice — consult licensed professionals before structuring an acquisition.