| Item |
Standard Criteria |
Comments |
| Down payment and principal reduction on note
(combined) |
30% minimum of purchase price combined |
Down payment should be all cash, not borrowed |
| Payer credit |
600 FICO minimum |
No major derogatories (ie BK, 180 deliquency, etc.); credit
since business purchase should be emphasized |
| Seasoning (the number of monthly payments already
made) |
2 months minimum |
The more seasoning, the higher our purchase offer will be |
| Personal guaranty |
Required from principal stockholder or partner |
Can be waived if note has substantial seasoning or if CPA
prepared financials show significant cash flow |
| Term of note |
72 months maximum |
60 months or less is preferable |
| Position of lien |
1st |
Second lien possible if seller's CPA audited financial
statements or tax returns show enough cash flow to service both
1st and 2nd lien |
| Balloon payments |
None |
Discouraged except in cases where small balloons can be
amortized at same note payment within 24 months |
| Motivation for note sale |
|
Screen to see if seller is trying to sell note because of
knowledge of a deteriorating business |
