How much can you sell a promissory note for?

If you are the holder of a promissory note, you may be able to sell it in cash. However, it will sell the ticket for less than face value.

How much can you sell a promissory note for?

If you are the holder of a promissory note, you may be able to sell it in cash. However, it will sell the ticket for less than face value. Typically, a buyer of notes will discount 10 to 35 percent. With many business sales, the buyer gets a loan from a commercial lender.

Lenders, usually banks, are experts at documenting your loan to the buyer to make sure they get their money back. Lenders have banks (no pun intended) of form documents to help them collect and record transaction details and anticipate contingencies. In businesses where a commercial lender is not involved, parties often want to waive the formalities that a commercial lender would require and conduct the sale using documents they assume are good enough. A lower formality can be costly for a seller if the agreement involves the buyer making a down payment at closing along with a promise to pay the balance over time.

If the seller wants a cash payment, but seller financing is the only possible form of financing for the deal, then the seller can choose to sell their promissory note. The promissory note can be exchanged for cash, but the seller must be willing to accept a smaller amount of money in exchange for a cash payment. Many sellers choose to sell only part of their ticket. In this case, a company can buy the one-year portion of the promissory note, essentially buying the payments corresponding to the first two years.

After that time period ends, subsequent payments will be returned to the original seller. The more the note expires with the one-off payments, the greater the amount the investor will pay for it. When the above steps are completed, you, as the seller of the note, will be sent the closing documents to complete the transaction and assign your interest in the note to the buyer of the note. In real estate, a promissory note is a legal document that is almost always accompanied by a mortgage or trust deed.

Several factors can affect the purchase price of a promissory note, including the position of the note, the interest rate and the type of business, etc. Selling a promissory note is a viable option for those considering seller financing and, at the same time, wanting a cash payment. In that case, you should speak with an experienced attorney who has experience in promissory notes. A note will show the amount owed, the interest rate and term, the amount of the payment and the due date, and what happens in the event of a default.

Most mortgage notes have a duration of five years, during which time the buyer normally applies for a mortgage from banks and pays the seller with the bank loan. However, the downfall of selling a business on a promissory note exists in the fact that if a buyer does a bad job managing the acquired business, it could cause the seller to lose a portion of the payment price. A dispute related to a promissory note could be resolved easily and quickly, or it could go to trial. A lawyer can guide you in drafting a legal note and making sure that it contains all the information necessary to make it legally enforceable.

A fixed fee schedule is often used for specific tasks or projects, such as drafting a promissory note. If you own a promissory note and are interested in selling it, you must first inform buyers (e.g., since the promissory note is an important legal document, it is necessary for the seller of the property to keep the original note in a safe place.


  • Selling a Business Using a Promissory Note: Do You Have To Charge Interest? - Bartelt Grob Wisconsin Attorneys
Marisol Gourd
Marisol Gourd

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