Security on seller notes

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by a searcher from Charles Sturt University
in New Jersey, USA

1yr ago

Security on seller notes

What are normal/market securities that buyers allow for to secure a seller note? Is it normal for seller to ask for second position UCC lien on business assets and lien on company stock as security towards their note?

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reply by a professional 1yr ago
from University of New Brunswick in Saint John, New Brunswick, Canada

Yes - very common. It can be shares (vendor take back), a first charge or second charge on the assets, a letter of credit, cross guarantee (if you own another business), or a personal guarantee.

reply by a professional 1yr ago
from University of Michigan in Detroit, MI, USA

Agree with the other comments. This is fairly common--it doesn't always happen on searcher deals, but certainly won't raise an eyebrow. It's also nothing much to worry about as a buyer. As you state, it's subordinate to the primary debt (usually an SBA loan).