Seller Financing Business Contract Template for Canada

The Seller Financing Business Contract is utilized when a business owner wishes to sell their business but the buyer requires financing assistance, and the seller is willing to act as a lender for part of the purchase price. This arrangement is common in Canadian business transactions where traditional financing may be unavailable or insufficient. The document must comply with federal and provincial regulations, including the Personal Property Security Act, Interest Act, and relevant business legislation. It typically includes detailed terms about the business assets being sold, purchase price, payment schedule, interest rates, security interests, and remedies in case of default. This type of contract is particularly useful for facilitating business succession planning and enabling transactions that might not otherwise be possible through conventional financing channels.

1. Parties: Identification of the seller and buyer, including full legal names, business numbers, and addresses

2. Background: Context of the transaction, including brief description of the business being sold and parties' intention to enter into seller financing arrangement

3. Definitions: Key terms used throughout the agreement, including Business Assets, Purchase Price, Security Interest, and Payment Terms

4. Purchase and Sale: Details of what is being sold, including all assets, intellectual property, and goodwill included in the sale

5. Purchase Price and Payment Terms: Total purchase price, down payment amount, financing amount, interest rate, payment schedule, and prepayment terms

6. Security Interest: Description of security interests granted to seller, including assets serving as collateral

7. Seller's Representations and Warranties: Seller's declarations regarding business ownership, authority to sell, asset condition, and absence of encumbrances

8. Buyer's Representations and Warranties: Buyer's declarations regarding authority to purchase, financial capacity, and intended use of business

9. Closing Conditions: Conditions that must be met before the transaction can close, including due diligence and necessary approvals

10. Default and Remedies: Events constituting default and seller's remedies, including acceleration of payments and security enforcement

11. Covenants: Ongoing obligations of both parties, including buyer's obligations to maintain business and insurance

12. Notice: Methods and requirements for formal communications between parties

13. Governing Law: Specification of Canadian law and relevant provincial jurisdiction

14. General Provisions: Standard clauses including severability, entire agreement, and amendments