Seller Financing on $60k for a small business/restaurant transfer

[Jeremy Lee]

Hey all,

My in-laws are in the process of selling their restaurant and have already signed a purchase agreement with the buyer and are in escrow. They agreed to the buyer's terms that she would put $120k down and seller finance the remaining $60k. They haven't written the promissory note for the seller finance piece yet but in the purchase agreement the broker set the interest to 5.4%. The buyer *just* came back requesting that the interest rate be lowered to 5% and started talking about how the Treasury rate went down yada yada yada... 

My wife and I know very little about selling/buying businesses and my in-laws are the kind who blindly sign contracts so we're just trying to look out for them. 

I did some Googling and read that how interest for a private loan *should* be determined is to first find the Usury Law limit, which in my case (CA) is 10% so you know not to exceed that. Then look at the current prime interest rates (which I think I saw was 5.5% as of 12/20) and to get quotes from local banks for commercial loans for additional comparison. Assuming this is the accurate way to do so, the interest on this private loan should actually be no less than 5.5% - is that correct? Am I missing something? I realize this is a commercial or small business specific transaction so it likely differs from real estate, and so I might not be factoring something in. 

In any case, we have advised my father-in-law not to cave into her requests as it would also mean more paperwork for the broker and potentially drawing things out even longer. 

Any feedback would be appreciated though, so we have something tangible to stand-on as far as explaining why she has no grounds for asking for a lower interest rate (especially after signing the purchase agreement earlier on)