Seller-note and sale-leaseback calculator

What the calculator computes

Cannabis acquisitions are funded without SBA or ordinary bank loans. SBA SOP 50 10 8, effective 1 June 2025, makes marijuana-related businesses ineligible for 7(a) and 504 lending. The gap between the price and the buyer’s cash is usually filled by the seller carrying a note, and sometimes by selling the building to an investor and leasing it back. The calculator shows how those pieces fit:

• the seller note principal left after cash and sale-leaseback proceeds,
• first-year payments on that note,
• the annual leaseback rent and the total of note service plus rent, and
• the total cash delivered at closing.

The full menu of funding sources is on cannabis acquisition financing options.

The formula

• Note principal = price - cash at close - sale-leaseback proceeds (never below zero)
• First-year note service = note principal x note rate + note principal / note years
• Total first-year obligations = first-year note service + annual leaseback rent
• Cash plus sale-leaseback at close = cash at close + sale-leaseback proceeds

The note service figure is first-year interest on the full balance plus one equal slice of principal. It is a deliberately simple, slightly conservative measure, not an amortisation schedule.

Inputs

Input	What to enter
Price	Total purchase price for the business, including the building if it is part of the deal
Cash at close	Buyer equity and any third-party loan proceeds paid to the seller at closing
Note rate	Annual interest as a decimal, for example 0.1 for 10%
Note years	Term over which principal is repaid. If left at zero the tool uses one year
Building sale-leaseback proceeds	Net cash from selling the property to an investor at closing, after mortgage payoff and costs. Enter 0 if there is no real estate
Annual leaseback rent	First-year base rent under the new lease. The default is $96,000. Enter 0 if there is no sale-leaseback

On the rate: general small-business seller notes commonly run 6% to 10% (Morgan and Westfield data via Iconic, August 2026). Cannabis notes are negotiated deal by deal and often sit above that, because the seller’s alternative is a market where public cannabis lenders reported portfolio yields of 15.8% (Chicago Atlantic) and 13.2% (Advanced Flower Capital) at 30 June 2026.

Worked example

Illustrative, using the tool’s defaults: price $3,000,000, cash $1,200,000, note at 10% over 5 years, sale-leaseback proceeds $800,000, annual leaseback rent $96,000.

Step	Arithmetic	Result
Note principal	$3,000,000 - $1,200,000 - $800,000	$1,000,000
First-year interest	$1,000,000 x 0.10	$100,000
Annual principal	$1,000,000 / 5	$200,000
First-year note service	$100,000 + $200,000	$300,000
Leaseback rent	input	$96,000
Total first-year obligations	$300,000 + $96,000	$396,000
Cash plus sale-leaseback at close	$1,200,000 + $800,000	$2,000,000

The seller receives two thirds of the price at closing and carries one third. Under straight-line principal, interest falls each year ($100,000, $80,000, $60,000, $40,000, $20,000), so total interest over the term is $300,000.

Without the sale-leaseback (proceeds and rent both set to 0), the note would be $1,800,000 and first-year obligations $540,000, against $396,000 with it. That is the appeal. The cost is that note payments end after five years, while rent continues and usually escalates.

Testing coverage with the rent included

The tool adds the leaseback rent you enter to first-year note service, because both come out of the same cash flow. The default rent of $96,000 is a pure assumption for illustration: it equals a 12% initial yield on an $800,000 property sale. Use the rent in your own term sheet, which will usually sit in a long triple-net lease with annual escalators. Then compare total first-year obligations with the cash the business produces:

Line	Illustrative amount
After-tax cash flow before new rent	$520,000
Total first-year obligations from the tool	$396,000
Coverage	About 1.3x
Cushion	$124,000

Every dollar of rent reduces EBITDA by a dollar, so a sale-leaseback also lowers the future resale value of the operating business. Rent set as a share of sales can turn the landlord into a regulated financial-interest holder in some states, a point covered on true party of interest and financial interest rules. Lease terms, investors, and risks are covered on sale-leaseback with cannabis REITs and landlords.

How each side should read the result

Buyers. Measure payments against cash flow after 280E tax, not EBITDA. Adult-use operators keep far less of each EBITDA dollar, as the 280E effective tax rate calculator shows.

Sellers. The note is only as good as the security and the buyer. What can and cannot be pledged is on seller notes and security interests, and negotiating points are on seller financing in cannabis deals. A note may allow gain to be reported as payments arrive under the installment method described in IRS Publication 537, with exceptions for items such as inventory. The trade-offs against cash and stock are on cash vs stock vs seller note.

Limitations

• Simple interest-plus-principal method; no monthly amortisation, balloon, or interest-only period.
• Rent is a single first-year figure you supply; no lease escalators or property transaction costs.
• No taxes, no working capital adjustment, no escrow or holdback.
• Treats sale-leaseback proceeds as certain at closing. In practice the property sale has its own diligence and timing, and amounts may be deferred until regulator approval.
• Rates are inputs, not quotes. Nothing here is an offer of financing.

This page and the tool are educational and are not financial, tax, or legal advice.