A vendor take-back (VTB) is a loan from the seller to the buyer for part of the purchase price, repaid over time instead of paid in full at closing. Enter the amount financed, the rate and the term below for the payment amount, total interest, and payoff date.
Enter the amount seller-financed, the annual rate and the term. Toggle interest-only if the note is structured with a balloon payment. The schedule updates instantly — no email required.
A vendor take-back is only one way to structure the price. See how a sale price might split across inventory, equipment and goodwill → for the rest of the deal.
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The short version — the calculator above does the actual math for you.
A vendor take-back note is a standard instalment loan — the seller plays the role a bank would. Most VTB notes amortize like a mortgage: each payment is the same size, and it's split between interest (calculated on the outstanding balance) and principal, so the interest portion shrinks and the principal portion grows with every payment until the balance reaches zero at the end of the term.
Some VTB notes are structured interest-only instead: each periodic payment covers interest only, the principal balance never goes down, and the full original amount comes due as a single balloon payment on the maturity date — common where the buyer expects to refinance with a bank, or sell, before the note matures. Toggle “interest-only” above to see that version.
Payments can run monthly, quarterly or annually — the rate and the number of payments adjust together, so a note at the same annual rate and term costs the same total interest whichever frequency you choose (ignoring compounding timing differences), while the size of each individual payment changes.
Say the seller finances $150,000 of the price at 6% annual interest, repaid monthly over 5 years, starting 1 January 2027:
Run your own amount, rate, term and frequency in the calculator above — it uses the exact same amortization formula, and shows the totals broken out year by year.
It can be, and usually should be — commonly by a general security agreement over the business assets, a share pledge if shares were purchased, or a mortgage if real property is involved. An unsecured VTB leaves the seller as an ordinary creditor if the buyer runs into trouble.
The note itself sets out the default and remedy terms — typically acceleration (the full remaining balance becomes due immediately) plus whatever the security document allows, such as seizing pledged assets. See our article on what happens when a buyer defaults on a vendor take-back note.
Only if the vendor agrees to subordinate its security — a separate agreement ranking the bank ahead of the seller. Buyers financing part of a purchase with a bank loan alongside a VTB should expect the bank to require this before it will advance funds.
Interest income is generally taxable to the seller as it's earned, separate from any capital gain on the sale itself. The exact tax treatment depends on how the sale and the note are structured — speak with your accountant, and have a lawyer confirm the note documents match what was actually agreed.
It's a standard constant-payment amortization, the same formula lenders use, applied to the numbers you enter. Your actual note terms — including any prepayment rights, default provisions and security — are set out in the vendor take-back agreement itself, which a lawyer drafts or reviews before you sign.
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Book a 20-minute call with a business lawyer — $150, HST included, credited in full toward your file once payment is received.
This is a 20-minute call. We cover as much as we can and stop at twenty minutes. If more is needed, we will say what the next step is and what it would cost.
“Calls were scheduled around my hours, which mattered because I barely had time to review documents while running my business day to day.”
I.P. · Business seller · Sudbury
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Read more reviews →These are estimates for planning. They are not legal advice and they do not create a solicitor-client relationship. Last reviewed 23 September 2026.