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5 Things You Must Do To Fail in Business
There are more books about succeeding in business then curse words on MTV. It is not easy to define what makes a business succeed, but it is easy to describe what makes a business fail. If you are starting your business or currently being...
Book Summary: Mind Your Own Business
This article is based on the following book: Mind Your Own Business A Maverick’s Guide to Business, Leadership and Life By Sidney Harman Doubleday & Company, Inc., 2003 ISBN 0-385-50959-6 208 pages A maverick is an independent person who will...
Home Business Opportunity Abounds on The Internet!
Looking for a home business opportunity on the internet these days is a pretty involved process. That is, if you don’t know how to eliminate 90% of the junk that’s out there and pick among the home business opportunities that actually have merit...
Top 10 Mistakes Made in Business Plans
Lenders and investors may see hundreds of business plans in a single day. Make your business plan stand out against the rest, and avoid these common mistakes.
1. Not proving that you have the management expertise to make it happen. The...
Top 7 Small Business Sites for 2005
If you want to start a business in 2005, and start making money almost immediately, the sites listed below are some of the best I have found. I've chosen each site because it is absolutely outstanding in providing the tools you need to get started,...
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Eight Key Steps to Selling Your Business and Cashing In!
This year, some 700,000 American businesses will be sold. Most will be small and mid-sized businesses like yours. If you, too, are thinking of selling, consider these practical steps for making the process go smoothly.
1. Determine a Realistic Price Range
2. Understand the Tax Consequences
3. Prepare for a Sale
4. Seek Potential Buyers
5. Negotiate Your Deal
6. Sign a Sales Agreement
7. Plan for the Closing
8. File Paperwork With the IRS
Now for the GOOD STUFF!
Getting the Cash Out of your Business Note
Business notes, known more specifically as seller carryback business notes, are created when the buyer of a business can not or will not pay all cash. Frequently, banks and similar lending institutions are hesitant to loan money to new business owners who have minimal track records and where hard assets make up a small percentage of the total purchase price.
In the case where a buyer cannot obtain a loan, the seller is left with two choices (1) hold off until he/she find a buyer who can pay all cash or (2) carry back a note in order to collect future payments. The first option is often not realistic. In the second case, the seller is hopefully able to at least extract a large down payment to make extra sure that the buyer has some "skin in the game". However, even then the seller is usually in a position that he
prefers not to be in – he has no lump sum of money to either invest in other opportunities or to retire. Unlike a real estate note, where is there is a hard asset that is fairly easy to appraise; the business note is relatively risky to hold.
So, what is a business seller to do when he didn’t want to be in the lending business to start with and now has a need for immediate cash? What many people don’t realize is that the business note can be sold. The former owner can sell all or part of the note to get a lump sum of cash. In this way, both the goals of selling the business and getting the cash out of it are met.
In summary, selling a business note is an excellent way for the former owner of a business to get his cash out of the business. Whether the reason for selling the note is that the seller would have preferred all cash all along, that he now has large debts to pay, or that he has the opportunity to pursue other investments, the sale of a business note is a tool of which you should always be aware.
About the Author
Afra AmirSanjari is the Principal for Peacock Capital. Peacock Capital specializes in solving the cash flow challenges of Small/Medium Businesses, Government Vendors and Individuals with innovative financial solutions by providing a network for securing operating capital.
http://www.peacockcapital.com
info@peacockcapital.com
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