When the building is part of the deal

Anchored to
17.0% of these loans run exactly twenty-five years

The term tells you

The distribution of loan terms in this file is not smooth. 62.0% of acquisition loans run exactly 10 years, and 17.0% run exactly 25 years. Between those two points there is almost nothing.

Two spikes that sharp are not what a market produces by negotiating. They are what a rulebook produces. Maximum maturity in the programme depends on what secures the loan: a purchase of the business alone amortises over the shorter horizon, and only where real property is pledged does the longer one become available. So the term column doubles as a readout of whether the buyer also bought the building, and it says they did in roughly a fifth of cases.

Why it changes the deal

Including the property changes the arithmetic in the seller's favour. Property is collateral a lender can value and resell, unlike goodwill, so the loan is easier to approve. The longer amortisation spreads the payment, which relieves the coverage constraint that otherwise caps the price. And it removes the landlord, who is otherwise a third party with the ability to hold up a closing.

It also enlarges and complicates the transaction: an appraisal, an environmental assessment on many commercial sites, title work, and a survey. Each takes time, and time is the resource sale processes are shortest of.

Sell it, or keep it and lease

An owner who holds both the business and the premises has a genuine choice, and it is worth making deliberately rather than by default.

Selling both produces one clean transaction, a larger financeable amount, and a complete exit. Keeping the property and granting the buyer a lease produces a continuing income stream, an asset that may suit an estate plan better than cash, and a smaller sale that is easier for a buyer to fund.

The second route has a cost that is often overlooked. A seller who becomes the landlord to a buyer they have just financed through a seller note has two exposures to the same business and has not really left. If the company struggles, the rent and the note fail together.

What to watch

If the property is being sold with the business, agree early how the price is allocated between them, because the allocation affects both parties' tax positions and is much harder to negotiate once a headline number exists.

If the property is being retained and leased, the lease is part of what the buyer is buying and the lender will read it. A term that runs well past the loan, clear assignment rights, and a rent that a valuer would call market are what make it financeable. A below-market rent inflates the apparent earnings of the business and a lender will adjust for it; an above-market rent depresses them and reduces the price.