A business note is generated when a business is sold and the seller finances the transaction. The usual down payment is 33-1/3%, and the seller receives a monthly payment from the buyer for 5 to 7 years. There may or may not be a balloon, interest rate is negotiated
A business note is similar to a seller-financed note. The primary difference is that business notes are not secured with real estate property; a seller-financed mortgage note for instance is secured. In instances where a business is sold and includes real estate, a seller-financed mortgage note encumbers both the business and the real estate property. If real estate is included, the buyer may qualify for a commercial loan.

Reasons Why Business Notes Are Created:

- Faster Sales. Since financing is already in place, close the deal as quickly as your attorney can write the contract. Buyers don't have to wait months for a bank loan committee approval.

- Assurances of Performance. A note is verification to buyers that the seller has no aversion for the business' future. After all, the buyer has to make monthly payments to the seller for the duration of the note (5 to 7 years).

- More Prospects. Some buyers only deal with seller-financed businesses. Advertise self-financing and see more prospects.

- Banks as Negative Influence. Discourage prospective buyers from going to banks. When bank loans are refused (70% to 80% of the time), to justify their loan refusal, a banker may give negative information about your business. Prospective buyers may suddenly lose interest in the sale, seller-financed or otherwise.

- Controlling Financial Terms. Since the seller assumes the function of a bank, they dictate terms: down payment, length of the loan, and other factors. Having control of financial terms make selling your business convenient, efficient and easier.

Types of Business Notes:

Businesses could be in strip malls, shopping centers, commercial buildings, or on land. We buy business notes on dry cleaners, restaurants, bars, convenient stores, healthcare facilities, manufacturers, florists, auto repair shops, gas stations, and much, much more. Real estate may or may not be included in the sale.

Reason to Sell a Business Note:

What happens if the seller needs more cash than the down payment? Suppose additional lump-sum cash is required to invest in a new business, buy properties, or pay for collage tuition, health bills, retirement, etc. Can they sell all or a portion of their business note for additional cash? The answer is "Yes!" We will buy your business note.
Terms are simple. The buyer must have excellent credit, put down at least 33-1/3%, and have some experience in the business. Basically, that's it! This is, of course, subject to buyer's credit, type and location of business, and other factors.
For a free quote, fill out our confidential worksheet.

Selling your Business Note - Depending on circumstances, there are two ways:

If a business note is already created and the buyer meets our criteria described below, "Terms for Selling the Business Note" and "Criteria," fill out our worksheet on-line and submit it back to us. If proper documents are in place, you can get lump sum amount within weeks.
If you have not yet sold your business but about to come to terms with a buyer, contact us before the note is created. We may be able to get you a lump sum cash at closing when the note is signed.

Terms for Selling Business Notes:

Purchase amount: $10,000 and above, a minimum of 33-1/3% down payment, buyer must have excellent credit, buyer must have some experience in the business,

Required documents to sell your business note:

Name(s), address, telephone number, social security number of the buyer(s)*, description of the business*, copy of the business note, authorization to release credit information, copy of the lease with property owner, title of real estate property (if applicable), sales contract (if applicable), closing statement (if applicable), appraisal date (if applicable), prior mortgage information (if applicable), payment history the previous 12 months.

Frequently Asked Questions:

- What fees are involved? There are no up-front fees. We pay for all expenses, such as credit report, appraisals, legal, title, UCC-1's etc.

- How soon can the seller receive their money? Within 2 to 6 weeks, subject to the completeness of required documents and completion of due diligence. More complete the documentation, the quicker the payment is forwarded to you.

- Who can create a business note? You or your attorney. Since a business note (as with other notes) is a legal instrument, only an attorney is authorized to create notes for third parties.

- Can the seller receive full price on when the business note is sold? No. We purchase business notes at reduced prices the same way U.S. government (FNMA, Ginnie Mae, Freddie Mac) buys home mortgages at a lower price from banks for lump-sum amounts. Why? The return on investment is far greater when banks use lump-sum cash for investment purposes rather than waiting years to get all their money. Sellers owning business notes are no different. They want the cash NOW - not later! The sale price depends on variables such as the down payment amount, credit, business experience, location of the business, etc.

- Instead of buying the entire note, can you buy just a portion of the note? Yes. Here is an example of a partial purchase. Assume Ms. Jane Seller has a long term lease on a popular pizzeria in a strip mall. She agrees to sell her restaurant to Mr. Dick Buyer for $70,000. Ms. Jane finances this deal and creates the following business note: 40% down, 9% interest for 5 years (60 months) and make monthly payments of $871.85. The 40% down payment is $28,000.

Assume Ms. Jane's immediate financial need is $45,000. Ms. Jane has Mr. Buyer's down of $28,000, but she needs an additional $17,000 ($17,000 + $28,000 [down] = $45,000) to buy another business. How could Ms. Jane get the additional $17,000?

In this instance, Ms. Seller can sell us a portion of the monthly payments for the $17,000 rather than sell the entire 60-month income. In return for $17,000 cash, we will ask that a 25 month* payment stream be assigned to us. This means that Mr. Dick Buyer will be making 25 monthly payments to our lenders rather than to Ms. Jane. After we receive the 25 payments, Mr. Dick Buyer resumes sending the remaining monthly payments back to Ms. Jane. Ms. Jane does not have to pay us back the $17,000 since we were repaid through the 25 payments.

* 25 months just illustrate how this program works. This could result in more or less monthly payments. This is subject to the financial conditions, buyer's credit, location, business experience, etc.

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.