Unlike a cash sale where the seller can comfortably walk away from the business with money in the bank, when you seller finance a business, the seller continues to be tied to the business for a pre-determined amount of time after the sale is complete. If the business succeeds, the new owner pays back the principal with interest and everyone is happy. But if the new owner fails, the seller could suffer the loss of interest income and incur additional costs to collect the debt.
The bottom line is that a seller-financed sale needs to be evaluated as a business investment. Like any other investment, there is a certain amount of risk inherent in the decision. If you are comfortable enough to invest in the new owner, then it could be beneficial to finance the sale yourself. You’ll likely close the deal more quickly, receive a higher asking price and earn income from collected interest.