Business Note Underwriting Criteria

August 12th, 2011

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

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