The Business Seller Financing Agreement is a crucial document used in Canadian business acquisitions where traditional financing methods are either unavailable or undesirable. This agreement is particularly common in small to medium-sized business transactions, typically ranging from $100,000 to several million dollars. It enables sellers to expand their pool of potential buyers while potentially earning interest income, and allows buyers to acquire businesses with lower initial capital requirements. The document must comply with Canadian federal and provincial regulations, including the Personal Property Security Act, Interest Act, and relevant business legislation. It details the financing terms, security arrangements, operational requirements, and protections for both parties. The agreement is especially useful in situations where the seller wishes to ensure a successful business transition while maintaining some control through financial leverage.
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1. Parties: Identifies and defines the Seller and Buyer with full legal names and addresses
2. Background: Contextual information about the business sale and the seller's agreement to provide financing
3. Definitions: Defines key terms used throughout the agreement
4. Purchase Price and Financing Terms: Details of the total purchase price, down payment, and financing amount
5. Payment Terms: Schedule of payments, interest rate, payment methods, and prepayment provisions
6. Security Interest: Description of assets serving as collateral and PPSA requirements
7. Representations and Warranties: Statements of fact by both parties regarding their capacity, authority, and business condition
8. Buyer's Covenants: Ongoing obligations of the buyer including business operation requirements and financial reporting
9. Default and Remedies: Events constituting default and the seller's available remedies
10. Insurance Requirements: Required insurance coverage on business assets and key persons
11. Assignment and Transfer: Restrictions on transferring the agreement or business assets
12. Notices: How and where formal notices must be delivered
13. General Provisions: Standard clauses including governing law, amendments, and severability
1. Personal Guarantee: Required when individual guarantors are backing the buyer's obligations
2. Subordination Provisions: Needed when there are other lenders involved requiring priority arrangements
3. Post-Closing Cooperation: Used when the seller will provide transition assistance or training
4. Non-Competition Covenant: Important when the seller must be restricted from competing with the business
5. Employee Matters: Required when specific arrangements for existing employees are needed
6. Intellectual Property Rights: Necessary when significant IP assets are involved in the sale
7. Tax Matters: Added when special tax arrangements or allocations are required
8. Environmental Matters: Important for businesses with potential environmental liabilities
1. Schedule A - Business Assets: Detailed list of all assets included in the sale and serving as security
2. Schedule B - Payment Schedule: Amortization table showing all payment dates, amounts, and interest calculations
3. Schedule C - Security Registration Details: PPSA registration particulars and other security documentation
4. Schedule D - Financial Statements: Recent financial statements of the business
5. Schedule E - Permitted Encumbrances: List of allowed liens or encumbrances on business assets
6. Schedule F - Required Insurance: Detailed insurance requirements including coverage types and amounts
7. Appendix 1 - Promissory Note: Form of promissory note evidencing the debt
8. Appendix 2 - Personal Guarantee Form: Form of personal guarantee if required
9. Appendix 3 - Security Agreement: Detailed security agreement terms and conditions
Relevant legal definitions
Clauses
Relevant Industries
Retail
Manufacturing
Professional Services
Hospitality
Technology
Construction
Healthcare
Automotive
Food and Beverage
Real Estate
Distribution
Transportation and Logistics
Agriculture
Education and Training
Relevant Teams
Legal
Finance
Executive Leadership
Risk Management
Treasury
Corporate Development
Mergers & Acquisitions
Business Development
Operations
Compliance
Corporate Secretariat
Relevant Roles
Business Owner
Chief Executive Officer
Chief Financial Officer
Corporate Lawyer
Business Broker
Financial Controller
Managing Director
Operations Manager
Business Development Manager
Risk Manager
Commercial Director
Treasury Manager
Company Secretary
Legal Counsel
Finance Director
Mergers & Acquisitions Manager
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