Due to the fact that the conventional banking system generally does not provide financing for the purchase of a business, a seller and buyer of a commercial enterprise find that they must create a business note.

A business note is formulated when a business owner sells a business under a contract and takes back a note in lieu of cash; thereby, creating seller financing. The collateral for the note is the business and the remaining partners' and/or new owners' ability to repay the seller financing .

The creditworthiness of the purchaser of the business however is of the utmost importance for the purchase of a business note by a funding source.

In order for a funding source to find a business note enticing to purchase, the new owner of the business is required to have some cash equity paid into the purchase of the business. Although not necessary to create a business note, the inclusion of real estate and a reasonable interest rate must be a part of the note structure in order for Sovereign Mortgage & Funding Group to have the needed valuation to fund the purchase.

Conversely and of great import to the business seller/note holder, the financial strength and personal guarantee of the new owner can make the sale of the note non-recourse to the note seller.

If you are contemplating selling or buying a business, contact Sovereign Mortgage & Funding Group so that we can strategize the sale or purchase of your business and so that the cash to complete the transaction is there when needed.

Feel free to contact us anytime for a free no-risk consultation toll-free at (877) 836-4661 or email us if you have any questions.