Each day goods are bought and sold on credit through traditional bank financing. But did you realize that billions of dollars in debt financing also takes place in the private arena, outside of traditional bank markets?

When an individual or privately owned company sells property and allows the purchaser to make payments over time, rather than obtaining a traditional bank loan, it is commonly referred to as a private note, seller financing, an owner carry-back, or private paper.

A seller might be willing to finance property for a variety of reasons. Perhaps the buyer or the property has difficulties qualifying for traditional bank financing, the seller desires long term interest income, or the seller plans to maximize the selling price by offering easy terms. The seller now holds a note and is entitled to a future payment stream.