Why can't I seem to find many banks in Australia that accept sellers notes
December 30, 2021
by a searcher from University of Melbourne in Launceston TAS, Australia
i have spoken to every bank in aus and most are reluctant to accept sellers note as equity.
they want to lend against assets.
can i continually borrow against the same property i own as equity?
why are there so few cash flow lenders that provide unsecured and sellers note?
any ideas? is it possible to find these outside australia?
in Limerick, Ireland
Also, I would ask, has the bank any non performing loans? if so, then reference an immediate change of ownership (deal signed on a Friday, old owner out new owners in on a Monday) being an underlying reason as to what would cause a level of disruption in the business and in turn be a determining factor in many cases as to what may and would cause a loan to not perform,
Then follow up to say as part of the sellers note we require the owner to stay on board and transition out of the business to ensure continuity of operations, that will make any investor or bank feel much more comfortable in accepting a note as your equity,
Finally, if property is included in the deal, then IF the loan doesnt perform the bank takes the property and they mitigate the risk of loss, but if the business has a good DSCR ratio, meaning if the deals stands on it own two feet, really its a win win for a bank,
Look for cash flow lenders, and then say a sellers note means the sellers equity is our equity and nowhere does it say or require that the equity needs to come from the purchaser, it say equity needs to be in the deal, well the sellers equity is that equity, sell it harder, sell your team (assuming you have a good team) and sell the deal (assuming its a good cash flowing business)
from The University of Michigan in New York, NY, USA