Our Purchasing Criteria

Does your submission meet the following criteria? Here's how to quickly determine if your seller financed Business Note qualifies for funding. Items listed in order of importance. 

Not all criteria need to be met, but generally the most important factors are:

Down Payment

20% minimum of purchase price. Please specify if any of the down payment was borrowed

Payor Credit

No minimum FICO*, but no major derogatories (i.e. bankruptcy, >90 day delinquency, etc.). Credit history since business purchase should be emphasized

Business Cash Flow

The SELLER’S corporate tax returns and P&Ls show enough cash flow to service the note debt. If historical biz cash flow isn't sufficient, we may still fund if buyer has documented outside income or the Note has a lot of seasoning

Seasoning

Minimum of 1 monthly payment made. Our purchase offer will be higher for notes with more seasoning

Personal Guaranty

Required from principal BUYER (or Note “payor”) unless note has substantial seasoning or if CPA audited financial statements show significant cash flow

Security/Collateral

Seller has filed UCC-1 against business assets and buyer & seller have executed security agreement. Required unless Note has strong seasoning (and guarantor credit is good) 

 

Other important, but less critical criteria:

Lien Position

First preferred, second possible depending on business cash flow and CLTV**

Balloon Payments

Balloon payments considered if the # of remaining months until the maturity date plus the # of months needed to amortize the balloon (at the current monthly payment) is less than 72 months

Max # of Payments We Can Purchase

72 monthly payments; in cases where maturity >72 mos., we can purchase a partial of up to 72 monthly payments

Max/MInPurchase Amount

Maximum quote of up to $600K on any one note; no minimum

Hybrid Note

Hybrids (a transaction involving the sale of both r/e and a business) now considered if both business and the real estate collateral is located in CA

* FICO = experian credit score
** CLTV = combined balance of all encumbrances to business value

 

In addition, below is a short list of documents from the business sale and other items that we'll need to review to make a decision:

  • Promissory Note (with buyer's personal guaranty) 
  • Security Agreement
  • Purchase Contract/Asset Sale (a Bill of Sale may be substituted if parties didn't execute a contract)
  • Proof the seller has received and deposited the down payment proceeds and the last 3-5 monthly payments
  • Settlement/Closing Statement, if applicable
  • UCC-1