Promissary Note Used As Down Payment

Hello,
Hope someone may have the answer. We recently sold our business and carried a 100k promissary not. The note is not secured by property but is secured by equipment collateral with an insurance policy that name us if collateral comes into harms way. The buyers have excellant credit and the business we sold does approx 600k yearly. Would the bank take the note as a down payment and about how much would they want in return. (what would they allow on the note dollar wise). We are credit worthy and have just purchased a new business with real property but are somewhat short of fund due to the new investment and would like to purchase a home. Hope someone can help.
Thanks, Diamondlil

Comments(2)

  • KyleGatton7th April, 2004

    It is an asset that you could use to cross collateralize a loan. The bad part is that it is on equipment that depreciates, so the amount they will cross collateralize will be based on the depreciated equipment value. Some do the value at the end of the loan period, others do it based on current value. In short dont expect to be collateralized for the full 100K but you will get some collateralization if your particular bank will allow it.

    Good Luck,
    Kyle

  • myfrogger7th April, 2004

    Yes you have two options that come immediately to mind:

    1. Cross collaterize the equipment to secure the new loan in part

    2. Find a note buyer to buy your note at a discount. You'll not likely get much out of it though so I don't think this is the greatest option.

    In the future I would recommend that any notes you hold be secured by real estate if possible. Real property is a much greater asset.

    GOOD LUCK

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