Industry Standards
Published Standards
SFSB publishes the industry's definitive form agreements and best practice guidelines. These standards represent the collective expertise of industry practitioners, legal professionals, and financial experts.
About the Standards
The First Complete Standards Library for Seller Finance
SFSB's six published standards cover the complete lifecycle of a seller-financed small business transaction — from the initial purchase agreement through ongoing note servicing. Each standard was developed through practitioner input, legal review across multiple jurisdictions, and a formal member comment period before adoption by the Board of Directors.
Two standards — SFSB-2 (Seller Disclosure Statement) and SFSB-4 (Due Diligence Checklist) — are publicly available in summary form. Full form access for all six standards is a member benefit.
Six Published Standards
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Standard Seller Finance Purchase Agreement
A comprehensive, attorney-reviewed purchase agreement template for seller-financed business acquisitions. Covers note terms, collateral, representations and warranties, closing conditions, and default remedies.
Seller Disclosure Statement
A standardized disclosure form that ensures buyers and note investors receive material information about the business, financials, pending litigation, and known encumbrances prior to closing.
Broker Fee & Engagement Agreement
A clear, enforceable engagement agreement for note brokers and business brokers establishing the scope of services, compensation structure, exclusivity terms, and fee disclosure requirements.
Due Diligence Checklist
A comprehensive checklist covering business, financial, legal, and collateral due diligence for seller-financed transactions. Organized by category with guidance notes for each item.
Note Servicing Standards
Best practice standards for the servicing of seller-financed notes, including payment processing, escrow management, default handling, insurance monitoring, and borrower communications.
Underwriting & Credit Best Practices
A framework for evaluating seller-financed notes and business acquisitions, covering financial statement analysis, debt service coverage, collateral assessment, and pricing methodology.
Standards at a Glance
What Each Standard Covers
A brief explanation of the scope and purpose of each SFSB published standard.
SFSB-1 — Standard Seller Finance Purchase Agreement
Governs the purchase of a seller-financed business. Establishes the promissory note terms (principal, rate, amortization, balloon), collateral pledged (business assets, personal property, real estate if applicable), seller representations and warranties, closing conditions, events of default, and cure periods. Provides a complete starting-point agreement that both buyer and seller counsel can work from rather than drafting from scratch.
SFSB-2 — Seller Disclosure Statement
A standardized pre-closing disclosure form completed by the seller and provided to the buyer and any note investor. Covers material facts about the business (financial condition, litigation, regulatory compliance, known encumbrances, pending liens or judgments, and business continuity risks). Designed to satisfy disclosure obligations across most state jurisdictions and to reduce post-closing disputes over undisclosed conditions.
SFSB-3 — Broker Fee & Engagement Agreement
Establishes the written engagement between a note broker or business broker and the client. Specifies the services to be rendered, the fee structure (flat fee, percentage of closing, or hybrid), exclusivity period if any, tail provisions, and all required fee disclosures. Built to be enforceable as a standalone contract and compliant with applicable state broker compensation laws.
SFSB-4 — Due Diligence Checklist
A categorized due diligence framework organized into four sections: (1) Business — operational history, customer concentration, key-man risk; (2) Financial — three-year P&L, tax returns, interim statements, cash flow; (3) Legal — corporate documents, pending litigation, IP, licenses; (4) Collateral — UCC searches, real property, equipment appraisals. Includes guidance notes explaining the significance of each item for note investors and buyers.
SFSB-5 — Note Servicing Standards
Establishes best practices for the servicing of seller-financed promissory notes throughout their life. Covers payment processing timelines, payment application order (fees, interest, principal), escrow management for insurance and taxes, late charge calculation, default notice requirements, cure periods, acceleration procedures, and borrower communication standards. Applicable to both self-serviced notes and third-party servicers.
SFSB-6 — Underwriting & Credit Best Practices
A framework for evaluating the creditworthiness of a seller-financed note or business acquisition. Covers financial statement normalization (add-backs, SDE calculation), debt service coverage ratio (DSCR) thresholds, collateral assessment methodology, pricing approaches, and risk-tiering guidance. Provides structured underwriting criteria that note investors can apply consistently across transactions.
How Standards Are Made
Our Standards Development Process
SFSB standards are developed through a rigorous, transparent process that incorporates practitioner expertise, legal review, and member input.
Research & Drafting
The Standards Committee conducts member surveys, industry research, and expert interviews to identify gaps and draft initial standard language.
Legal Review
Draft standards are reviewed by the Legal & Regulatory Committee and outside counsel to ensure enforceability and regulatory compliance across jurisdictions.
Member Comment Period
All SFSB members receive a 60-day comment period to review and provide feedback on proposed standards before finalization.
Board Approval
The SFSB Board of Directors formally adopts each standard by vote, assigning a standard number and effective date.
Publication & Access
Approved standards are published in the SFSB member portal. Summaries are made publicly available; full form access requires active membership.
Annual Review
Each standard is reviewed annually and updated as needed to reflect regulatory changes, case law developments, and evolving industry practice.
Access the Full Form Library
Members receive complete access to all SFSB standards and form agreements. Join today starting at $150/year for Academic or $495/year for professional memberships.
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