Sellers Notes

searcher profile

December 08, 2022

by a searcher from University of California, San Diego in Portland, OR, USA

Hello All,


Does anyone have recent experience or good data on what market terms are for sellers notes in the retail sector? Are personal guarantees required? The note being contemplated is ~ 1.0x SDE. Many thanks!

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commentor profile
Reply by an intermediary
from Boise State University in 800 W Main St, Boise, ID 83702, USA
Seller notes are negotiable for rate and term. However, if there will also be a third-party lender involved, the seller note terms may be changed based upon the lender's underwriting criteria. I would recommend personal guarantees on the seller note. The third-party lender will require personal guarantees on their note.
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Reply by an investor
from University of Pennsylvania in New York, NY, USA
Related to personal guarantee - my limited experience (sample size of one) is that a savvy lawyer for the seller will ask about the go forward structure. When they understood that we were using SBA and that it had a personal guarantee, they asked for a personal guarantee on the seller note as well.
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