Seller financing

Seller financing is a deal structure where the seller agrees to lend the buyer a portion of the purchase price directly, collected over an agreed schedule after closing, rather than requiring the buyer to raise that entire amount from a bank or other lender upfront. It is common in dental practice sales specifically because it signals real confidence: a seller willing to finance part of the deal is putting their own money behind the belief that the practice will perform well enough under new ownership to make the payments.

For a buyer, seller financing can bridge a gap that a traditional lender's terms won't cover, or reduce the total amount that needs to be raised through a bank, sometimes on more flexible terms than institutional financing offers. For a seller, it usually comes with a meaningfully higher interest rate than they'd earn elsewhere, compensating for the real risk that the buyer's practice underperforms and the payments become harder to collect.

Because the seller is now also a creditor with an ongoing financial stake in the practice's performance, the terms (interest rate, repayment schedule, what happens on default) deserve the same careful legal drafting as the purchase agreement itself, not an informal handshake arrangement.