Business Note Sale Underwriting

What Documents Are Required For A  Business Promissory Note Sale

Once you are basically pre-approved for a sale of your business promissory note payments and have agreed to a quote provided to you by your business note broker or investor, the note selling process is far from over.

There is still the underwriting process.

What Is The Underwriting Process?

The underwriting process for business promissory note purchases is similar to the underwriting process for obtaining a loan for a new house. 

During mortgage loan processing, underwriting is the due diligence process done by a lending institution to verify the financial information of the potential money borrower. 

During the business note purchase process, underwriting is the due diligence process that the business investor goes through to verify the financial information of the potential note seller.

Underwriting involves the collection of documents to verify numbers and information that was given at the time of the note quote request as well as to obtain some new information. 

If, after a final review of all required documentation, something can't be verified or something doesn't quite meet the investor's funding requirements, the deal could fall through and not get funded.

Underwriting Documentation

The following is a partial list of documents that could be requested to check for business promissory note underwriting requirements.

1) A copy of the seller-financed business promissory note.

2) The settlement statement for the sale of the business.

3) Proof of payments paid on the business note so far.

4) Copies of any other notes associated with the business sale.

5) Latest tax returns just before the sale of the business (last 2 years worth of tax returns for example).

The business note investor will also likely check for any UCC-1 filings on the business to verify that the note they are considering purchasing is a first-position business note.

Related Articles:

How to Sell Business Notes

Learn the steps involved with selling a business note.

The Business Note Quote Request

Learn what information would probably be required to obtain a business note quote request.

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Business Promissory Note Underwriting Requirements