As business notes present a larger risk to investors since many business fail in the first 5 years, investors generally offer pricing with higher discount from the balance owed. If equipment was included as chattel / security in the sale of business, the seller will receive a better offer.

General Information

• Type of Business
• How long has the business been operating
• Why was the business sold
• What experience does the note payer have in running this type of business
• How much was the business making the last two years before it was sold
• Is the building owned or leased? What are the terms of the lease if leased? 
• The payer has to sign personally as well as for the corporation if the payer is a corporation
• EPA phase 1 and phase 2 reports on a property with hazardous materials issues, if available

Sale of Business Notes

• If you have sold a business and took back a business note from a buyer who meets our criteria described below, you will get lump sum amount within 4-6 weeks after all proper documents are in place.

• If you are preparing to sell your business, we can show you how to structure a business note from the sale. We may be able to get you a lump-sum cash at closing when the note is signed.

Types of Business Notes

Businesses located in strip malls, shopping centers, commercial buildings or on land.

• Dry cleaners
• Coin laundry
• Restaurants
• Bars
• Convenience stores
• Healthcare facilities
• Manufacturers
• Florists
• Auto repair shops
• Gas stations
• Service businesses
• Others

Reasons for Selling Business Notes

• Buy property
• Start a new business
• Make investment for a fair return
• Settle personal debts
• Pay for health bills
• Cover retirement expenses
• Guarantee children’s education

Guidelines 

• First position lien only
• Minimum 35% verifiable cash down payment from buyer
• Minimum amount $10,000
• Maximum note term 60 months fully amortized
• Minimum note interest rate 10%, preferably 12%-15%
• Buyer has a good credit rating
• Buyer has sufficient funds in the bank for operating costs and reserve
• Credit checks on buyer and seller

Required Documents

• Description of the business
• Promissory note
• Purchase and sales agreements
• Security agreement
• Recorded UCC-1 (financing statement)
• Lease agreement and assignment
• Title of real estate property
• Appraisal report
• Bill of sale
• Franchise agreement
• Documented payment record
• Settlement / closing statement
• Tax returns for 2006 and 2007
• Profit & Loss Statement for YTD 2008 
• Buyer’s personal information
• Buyer's credit report

Criteria

Seasoned Notes - 4-6 Monthly Payments Received to Date

• Minimum 35% cash down payment
• Same location for 2 years (4 years for food service businesses-restaurants, bars, fast food, etc.)
• Business tax returns and financial statements for 2006, 2007
• Year-to-date interim business financial statements for 2008
• Buyer should have experience operating the business in question
• Buyer’s FICO 625+
• Promissory note must be personally guaranteed by buyer

Unseasoned Notes – Payment History Less Than 4 Months

• Minimum 40% cash down payment
• Same location for 3 years (4 years for food service businesses-restaurants, bars, fast food, etc.)
• Business tax returns and financial statements for 2005, 2006, 2007
• Year-to-date interim business financial statements for 2008
• Buyer should have experience operating the business in question
• Buyer’s FICO 650+
• Promissory note must be personally guaranteed by buyer
• Seller may be required to provide personal guarantee for the performance of the promissory note if the financial strength of buyer is not satisfactory