|
Item |
Standard
Criteria |
Comments |
|
Down payment
and
principal
reduction on
note
(combined) |
30% minimum
of purchase
price
combined |
Down payment
should be
all cash,
not borrowed |
|
Payer credit |
600 FICO
minimum |
No major
derogatories
(ie BK, 180
deliquency,
etc.);
credit since
business
purchase
should be
emphasized |
|
Seasoning
(the number
of monthly
payments
already
made) |
2 months
minimum |
The more
seasoning,
the higher
our purchase
offer will
be |
|
Personal
guaranty |
Required
from
principal
stockholder
or partner |
Can be
waived if
note has
substantial
seasoning or
if CPA
prepared
financials
show
significant
cash flow |
|
Term of note |
72 months
maximum |
60 months or
less is
preferable |
|
Position of
lien |
1st |
Second lien
possible if
seller's CPA
audited
financial
statements
or tax
returns show
enough cash
flow to
service both
1st and 2nd
lien |
|
Balloon
payments |
None |
Discouraged
except in
cases where
small
balloons can
be amortized
at same note
payment
within 24
months |
|
Motivation
for note
sale |
|
Screen to
see if
seller is
trying to
sell note
because of
knowledge of
a
deteriorating
business |
