|
Buying And Selling Blog > Buying Selling > Buying And Selling Cash Flow Notes
Find Out How To Make Money Buying And Selling Cashflow Notes
down payment and the sale of the note will usually be about the same as you would have received from an all-cash sale of your business. That's because all-cash buyers can insist on a much lower selling price.
The amount of money you’ll actually receive for your note depends on a number of factors. But as a general rule, for a full purchase, you can expect to be paid 50 to 80 percent of the balance of the note. More specifically, the amount of cash your note can be sold for will be determined by three general components: the current economic environment, the terms of the note (payment amount, interest rate, length of payback, etc.) and the degree of risk or probability that the note holder will lose his/her money.
Criteria for Purchasing Notes
Certain guidelines must be met in order for a business note to be purchased. Naturally, first-position liens are eligible. Here are some other elements investors like to see:
• The business is in a profitable position, with evidence of operating cash flow.
• The buyer has good credit, which generally means a FICO score of at least 625.
• The buyer put down at least 30 percent of the purchase price in cash, which signifies that he/she is truly committed and able to weather down cycles.
• The principal owners have made a personal guarantee on the note.
• The note has been "seasoned," meaning the buyer has made payments for at least two months. This shows that the buyer is happy with the Previous Page <<< >>> Next Page
Comments about this topic (0)
· No comments yet, be the first to comment
Related Buying And Selling Blog Resources:
| 
