Structuring A Business Note To Draw The Attention Of An Investor

By: Jocky Marshal


When you decide to sell your business note for quick cash to invest in your next business venture, you need to find a top business note buyer, who can offer best value. The worth of your business note mostly depends on how you have structured it.

When estimating the future payments from the purchase of your business note, the investor looks for particular things which include the buyer’s credit history, the total number of payments made, down payment of the buyer, the overall amount of payments being sold, the duration of the note, offsets, business note amortization, interest rate on the note, business cash flow and past profits, etc. These are considered by the business note buyer, to reduce the risk of a default on the business note.

In case the buyer defaults, the tangible resources of a small business organization may not be sufficient enough to meet the due amount on the note. Hence the business note buyer evaluates different ways to minimize the occurrence of a default. The investor will require the business buyer to follow their personal guarantee to secure the business note, if there is a default on the note.

Business note buyers generally require a payment of at least two months made on the business note by the new business owner. For professionals such as dentists or doctors who are the new owners, paid monthly payments of large number will be necessary. This is required to see that the new owner of the business is producing cash flows. The new owner can also check whether the business is meeting the expectations or not.

The buyer of the business is required to have a minimum credit score of 600. If the future payments value of the business note that is being purchased attains a certain level, then the business note buyer will require a higher score. It is necessary that the buyer provides personal guarantee to the business note. It cannot be done by the organization purchasing your business. An individual, who is signing on behalf of the organization, cannot guarantee the business note because the business note buyer will go after the assets of that individual in case of a default. In order to provide personal guarantee, a financial statement for the buyer has to be acquired to confirm that the individual has necessary assets.

In order to attract the attention of a prospective business note buyer, your note should be structured in a way that it includes necessary factors such as minimum number of payments made, lien position, personal guarantee, buyer having prior experience in the type of business, purchase agreement, high interest rate to support payment of the note, promissory note, real estate.

You can find potential buyers of your business note on Clear Green Financial. You can finance your small business through Clear Green Financial and acquire the necessary working capital. Clear Green Financial contract buyers specialize in the purchase of private business notes. You can get the necessary information on their website cleargreenfinancial.com.

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