Owner financing of a business.
I’ve got a friend that is selling his business to a couple from Brazil – the buyers are both bankers – they are putting down 20% cash – the selling price 1.3 mm – he is owner financing the balance over 5 Yrs (20 yr amort) at around 5% – he still has a loan on the biz with the bank for 609k – do you know of any company that would jump in with the seller and share in the owner financing debt so my buddy could pull more money out of the biz before the amort kicks in???
Thanks for the question. Owner financing is tough because it can be very difficult to offload all or part of the loan to reduce seller exposure. In this case, it will probably be even harder because your buyers aren’t American.
That said, there are groups that will purchase all or part of various loans and you may be able to find one that’d work with you. A few places to start:
1. Online platforms – there are several platforms online that people can use to buy or sell notes & mortgages
2. Private lenders – some lenders will buy or sell loans in the secondary market in addition to issuing new loans
3. Referrals – if you have relationships in banking – especially with smaller operations or independent lenders that provide niche loans, you might check with them to see whether they’re selling loans in the secondary market.
These are a few places that you might want to check first to find someone to buy part of the note from your seller. Keep in mind that most companies you identify to buy part of the note will likely want to purchase at a discount, so your friend will have to be willing to take a loss in exchange for reducing their exposure.
Hope this helps,