When it comes to selling your business note, there are many details and documents involved in finalizing the transaction:

  • An assignment of the security instrument (for the buyer)
  • A UCC-1 Financing Statement
  • An endorsement of the business note
  • A sales purchase agreement
  • Signed security agreement
  • Closing statement
  • All relevant operating licenses

These facilitate the sale, transfer ownership to the buyer, and provide the lump sum to you, as the seller. A knowledgeable broker will walk you through the entire process, from gathering the appropriate documentation to getting the best prices for your business note. You can rely on the broker(s) at Note Buyer Go. We know that due diligence for these types of notes is more involved and why.

Investing in business notes can provide far higher yields, but they do involve more risk for the buyer. For example, the collateral may not be worth enough to cover the loss on the investment. Therefore, buyers will examine several factors as they consider whether to buy your promissory note:

  • Is there a personal guarantee signed by the original borrower (the business owner) that ensures the individual is personally liable if there is a default on the loan and the value of the assets falls short of the note’s
  • The down payment should be at least 20% or more
  • The term of the note is relatively short (6 years)
  • A relatively high interest rate (10% or more)
  • The profitability of the business itself
  • The credit rating of the business/owner

Don’t get too concerned if your note falls short in one or two of these areas. This can be balanced against other benefits of your note. For example, the owner’s credit rating may be lower than a buyer desires; however, the buyer may overlook the deposit was a hefty one.