1. Better loan terms from banks

Deals involving seller financing are more attractive to lenders, since it mitigates risk of the seller bailing out. Lenders feel more confident funding acquisition deals that involve seller financing.

2. Large equity coverage

Generally, seller financing accounts for about 10 percent of the overall equity required for buying business.

3. Capital gains savings

Capital gains tax is 35 percent of the gains. Through seller financing, the seller receives money incrementally rather than one lump sum payment, substantially lowering the tax liability. Typically, seller financing deals have a 15 percent higher sale price than those covered by commercial financing. The interest on the sale through seller financing adds to the capital gains for the seller.