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In eighty-five (85%) percent of the cases when “small” businesses are sold, the seller must carry back the financing for a large part of the sales price or the full price itself.

Financing to buy a business is not like getting a loan from your banker to buy a home.  Real estate is usually not involved and, therefore, there is no “collateral” a bank can really attach a lien to thereby making the transaction more difficult.

Additionally, many times whenever a business is sold, the buyer does not have adequate funds for a complete purchase.

At that point, the buyer and seller agree on a down payment and sign a contract specifying how the remaining payments are to be made over time. The owner creates a note for the buyer. This is a business note. This business note can be sold for cash.

There is such a broad range of  business notes that can be purchased, it would be impossible to list them all.  However, some examples include the following:

  1. Restaurants

  2. Convenience Stores

  3. Florists

  4. Medical/Professional Practices

  5. Laundromats

  6. Dry cleaners

  7. Printers and many others

Who is a business note buyer?

A business note buyer functions very much like a private mortgage buyer. Let’s say there’s a potential buyer of a business who cannot qualify for a commercial loan. In today’s world he’s not out of the running, because he can be financed through a business note buyer. The business note buyer represents a consortium of investors who specialize in this type of investment and liquidity is not a problem.

Fast Cash For Businesses

The seller of the business structures a private loan for the business which:

  • 1.  A note is bought by a business note buyer at closing or

  • 2. After a substantial downpayment and several months of seasoning (i.e. regular payments), the note will be purchased by a business note buyer.

The business has changed hands successfully for both parties, often in a very short period of time. Basically this means fast cash for the seller, and an easy loan for the buyer.

 

 

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