RV Park Seller Financing and Earnouts
Not every RV park purchase is financed entirely by a bank or SBA-backed loan and the buyer’s cash. In some transactions, the seller agrees to accept part of the price over time through a promissory note. In others, part of the price depends on how the park performs after closing. RV park seller financing and earnouts can help buyers and sellers bridge a gap in price or financing, but they bring their own risks and must fit the rules of any senior lender.
This article is general information for buyers and sellers of existing, operating RV parks and campgrounds. Every transaction is different, and both sides should work with qualified attorneys, accountants and tax advisors. Nothing here is legal, tax or financial advice.
How a Seller Note Works
With a seller note, the buyer pays part of the purchase price to the seller over time, with interest, under negotiated terms. Seller notes are typically subordinate to the senior lender’s loan, meaning the senior lender is paid first and may limit when and how the seller is paid. The note may be secured by the business assets or the property behind the senior loan, depending on the agreement.
Why Parties Consider Seller Financing
- It can reduce the amount the buyer must borrow from a senior lender or contribute in cash
- It may show the seller’s confidence in the park’s future performance
- It can help close a gap between the seller’s price and what a lender will finance
- It can keep the seller engaged in a smooth transition
Seller Notes With SBA Financing
When an SBA-backed loan is involved, program rules may affect whether a seller note can count toward the buyer’s equity and whether payments on the note are restricted for a period. Lenders apply these rules differently. See our article on SBA loans for RV parks.
Earnouts
An earnout ties part of the price to future results, such as revenue or earnings over a set period. For an RV park, an earnout might be considered when the seller expects a recent rate change, new seasonal bookings or a reopened amenity to produce results that have not yet shown up in the financial records. Earnouts can lead to disputes over how results are measured, especially when the buyer changes rates, staffing or operations. Some lenders and loan programs limit or prohibit earnouts, so buyers should confirm what their lender will accept before negotiating one.
Issues to Negotiate
- Interest rate, payment schedule and maturity
- Subordination and any standby period required by the senior lender
- Security, personal guarantees and default remedies
- Whether payments may be offset for breaches of the purchase agreement
- For earnouts, clear definitions, accounting methods and reporting
- The seller’s role, if any, after closing
How Seller Financing Relates to Value
Seller financing does not change what the park earns. A higher price supported mainly by seller terms may still strain cash flow. Our guide to RV park valuation explains how buyers and lenders evaluate price.
Seller Involvement and Transition
A seller who holds a note has an interest in the park’s success and may agree to help with the transition, training staff and introducing the buyer to returning guests. Our article on campground staffing covers transition planning.
What Lenders Look For
Senior lenders typically review seller note terms as part of the overall structure and want total debt payments to fit documented cash flow through every season. Our article on RV park loan requirements explains the broader review. Sellers considering a note should also read our guide on how to sell an RV park.
US Professional Funding helps buyers structure financing to acquire existing, operating RV parks and campgrounds, including transactions that involve seller notes. Learn more about our RV park and campground acquisition financing.
