- I'm holding a note from the sale of my business. Why should I sell it?
Business notes are usually sold because the individuals
holding them are not in the banking
business. Therefore, they don't want the trouble of
collecting late payments, and they can use the
extra cash for other investments, personal reasons, or
to use as a down payment on another
business. Maybe you fit one of these categories.
- How big a discount is there on the note?
It is impossible to tell until we get all the data
and documents from you, the note holder.
Each note is different. Maturity date, interest rate,
number of payments received, the credit of the
payor etc. all influence the amount paid for the note.
- I've heard the term "buying a partial."
What does this mean?
There are two basic ways to buy a note.
- The buyer purchases all of the remaining payments
due on the note. This is called a full purchase.
- The buyer purchases a portion of the remaining
payments. This is called a "partial purchase."
By buying only a portion of the remaining monthly
payments on the note, instead of purchasing all
of the payments, the note buyer is able to pay
proportionately more for the note. Put another way,
he can discount the note less. Very importantly,
a partial purchase allows the later return of the note
to you, the original seller, who can then collect the
For example: There are 50 payments left on a 60
payment 5-year note. We arrange for the
purchase of the next 20 payments due on the note.
This is also referred to as purchasing a certain
number of the "stream of payments." A partial purchase
gives you, the note seller substantial cash
immediately, and you also retain the right to collect
the final 30 payments. The note buyer is in a
better secured position with less risk, since he is
laying out less cash for the partial, but does move
into a first security position on the entire remaining
note balance while he collects his 20 payments.
This decrease of risk to the buyer, with less capital
investment, is the main reason that he can
pay proportionately more for the note.
After the buyer collects the 20 payments, the
remaining 30 payments revert back to you, the
original note seller. By calculating the cash paid
for the note plus the 30 remaining payments
multiplied by the monthly payment; the total received
by you, the seller (cash at purchase plus
back-end payment total) is quite attractive. This total
amount often comes very close to the
original remaining balance of the note at the time
it was sold. This is what makes a partial purchase
so attractive to you, the seller.
In many cases you are better off financially by selling
a portion of the stream of payments instead
of the entire note (full purchase). Additionally, what
often happens is that after the note is returned
to you, the original note seller, you may want to then
sell the remaining back end payments a second
time to raise more cash.
- How long does it take for the transaction to close?
Usually within 15 to 20 days after we receive all the
documents from you.
- Will you buy a note where some payments have
been late, or where the payor has
In many cases we can. In such a case, if he does
buy the note, the buyer naturally will pay less for the
note. It's all a matter of risk-reward. The higher
the potential risk of default, the less paid for the
- Can you buy a note that is in second position?
Except for very rare circumstances the note must be in first position.
- What it the procedure entailed in selling a note?
In order to give a quote to purchase, we take basic
information about the note itself. Then we
will need a copy of the note, a copy of the security
agreement, and any collateral listing which is
available (equipment, inventory, etc.). We can then give
you a preliminary quotation to buy the note.
Upon conditional acceptance by you, the note seller, the
buyer then proceeds with further in-depth
checking (known as due diligence). These checks include
credit checks, documentation that the
note is being paid on time, whether the payor on the
note has past business experience etc. The
buyer, after all, is interested in reducing his risk
before he buys the note.
Assuming that no
substantial negatives are found after his review,
the buyer will close on the purchase and can usually
wire funds to you within two to three weeks after the
date of receipt of the final documents from
- Are there any costs or fees to the note seller?
No. All costs, fees and commissions are included in
the purchase price. You will be quoted a
net price with no additional costs.
- What size notes do you buy?
Anywhere from $10,000 into the millions.
- How old must the note be?
Usually the more payments made, the lower the discount.
Note buyers usually like to see at least four
payments or more made on time. The longer the seasoning,
(number of payments made) the higher the
- Does the note have to be guaranteed (sold with recourse) by the note holder?
Yes and No! Many notes are bought without recourse.
Sometimes the buyer may want
recourse from the note seller to overcome a bad payment
history by the note payor. Giving
recourse usually increases the security for the note
buyer, and may result in a higher price paid for
the note. Actually, the note seller doesn't really
sacrifice much by giving recourse, since he already
is exposed in the event of default.
- If I don't like the purchase amount quoted by note buyer, am I obligated in any way to
sell my note?
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BARCLAY ASSOCIATES - Cherry Hill NJ
MINIMUM LOAN AMOUNTS
Copyright © 1997-2020 JS Inc./Barclay Associates-All Rights Reserved
- INVESTMENT PROPERTIES - COMMERCIAL MORTGAGE LOANS-
Multifamily - $ 400,000 minimum loan amount. ($500,000 minimum if referred by broker.) Multifamily buildings must be 10 units or more. NOTE Possibly can do Multifamily loan amounts as low as 250,000 ($300,000 if referred by broker.) but must have 25% down payment.
- OTHER INVESTMENT PROPERTIES
Office building loans, self storage units, mobile home park financing, strip centers, warehouses and other commercial real estate property loans - $300,000 minimum loan amount ($375,000 minimum if referred by broker).
- RAW LAND LOANS OR LAND DEVELOPMENT LOANS $1,000,000 minimum loan amount.
- SBA LOANS-$500,000 minimum loan amount. ($600,000 minimum if referred by broker).
- OTHER SMALL BUSINESS LOANS (NON SBA)- $500,000 minimum loan amount ($600,000 minimum if referred by broker).
- FACTORING AND ASSET BASED FINANCING These are business loans using accounts receivable, inventory, equipment & real estate as collateral- $1,000,000 minimum loan amount.
- OTHER TYPES OF FINANCING NOT INCLUDED ABOVE - contact us for minimum loan amounts.
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- We DO NOT finance residential properties-only commercial.
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