Diversified Funding Source
offers the following business note services:
- Lump sum for business notes
- Partial purchase of a business note
- Assistance in structuring a business sale to optimize
the value of a business note
- Business broker consultation / participation
Existing Business Notes
If you have already sold your business and have an interest
in selling all or part of your business note, contact
us for a no obligation estimate of value.
Creating a Business Note
If you are considering the sale of your business and would
like information on structuring the sale to optimize the
value of a business note, contact us. We would be happy to
send you our Business
Sellers Guide to Creating and Selling a Business Note.
Business Brokers
We work closely with business brokers whose clients are considering a
seller carry back financing option. Call us to see how we can financially
help both you and your client!
Business Note Top 10
The following are the ten most significant areas looked at in determining
the value of a business note. It should be noted that these are guidelines
that often have exceptions. Strength in one area can offset deficiencies in
others.
Each business note is unique and our consultants will be happy to assist you
in determining the value of your note.
- Your note should be in 1st position. Notes subordinate to an SBA
or commercial bank loan attract little to no interest from funding sources.
- Get the largest down payment possible. Down payments of 33%
or greater are preferred.
- Attempt to get the highest interest rate and the shortest term
possible. Funding sources will normally only purchase 5 to 7 years of payments.
Notes longer than that will often result in what is known as a "partial purchase".
This option often benefits both the seller and buyer of the payments. We will be happy
to explain how.
- Avoid balloon payments if possible. The most attractive notes
fully amortize in 5 years or less. Balloon payments present some uncertainty and the
associated risk may diminish the value of your note.
- Try to avoid early payoff clauses. Funding sources assume
that your buyer will execute the early payoff and they take that into account
when making an offer on your note. You can always approach your buyer later
with an early payoff offer.
- Sell to a credit-worthy buyer. Since the buyer of your business
will be making the note payments, their credit and payment history are important.
- Seasoning. You should expect to carry your note for a minumum
of 3 to 6 months before being able to sell. We can often generate interest in a note
before that, so give us a call right away. We can get a lot of the paperwork done ahead
of time to get you your cash sooner.
- Real Estate. A business note secured with real estate can be
more valuable since it reduces the level of risk.
- Pricing. An overpriced business will put downward pressure
on the value of the note. A business should have the ability to easily handle
the financial payments.
- Use a reputable and knowledgeable cash flow consultant.
Take advantage of our knowledge of the business note market. When it's time to
sell all or part of your business note, let us bring you the highest possible
offer from proven financial sources. We look forward to working with you and
being "Your Source for the Funds You Need Now!"
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