Selling mortgage notes

Selling a business note

Updated 2026-10-19

When you sell a company and let the buyer pay part of the price over time, you hold a business note (often called a seller note). Business notes that are secured by real estate, through a mortgage or deed of trust on the business property, get the most interest from note buyers. Notes backed only by business assets or a guarantee are harder to sell.

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What a business note is

In many small-business sales, the seller agrees to take part of the price as a note. The buyer of the business pays you monthly or quarterly, often with interest. The note may be secured by the business's assets (usually through a UCC-1 financing statement), backed by the owner's personal guarantee, or sometimes secured by real estate.

Business notes secured by real estate

If the sale included the building or land, and your note is secured by a recorded mortgage or deed of trust on it, buyers can review it much like a mortgage note: property value, lien position, payment history and paperwork. That is usually the strongest position to sell from.

Why other business notes get a careful look

A business note depends on one company's continued success, and business assets can lose value quickly. So buyers pay close attention to:

How the business has performed since the sale, and whether payments have been on time.
The collateral: real estate is strongest, then equipment and receivables. Goodwill alone is weak.
A personal guarantee from the new owner, and that person's financial strength.
Subordination: if a bank or SBA lender was paid first in the deal, your note may sit behind it. That affects price a lot.
The paperwork: the note, security agreement, UCC filing, guarantee and purchase agreement.

If the business stopped paying

A business note in default is a harder sale. Buyers will price in the cost and time of enforcing it, and if the note isn't secured by real estate, there may be little interest. Talk to an attorney about your options before you try to sell.

Getting a review

Have the purchase agreement, note, security documents and payment record ready (checklist), then request a no-obligation review. If the note is secured by real estate, say so. It usually changes the picture.

Questions

Can I sell a seller note that's subordinated to a bank loan?

Sometimes, but subordination reduces what buyers will pay and can restrict transfers. Check the subordination agreement before you start.

Is a business note the same as a promissory note?

A business note is a type of promissory note. The difference is what backs it and the business risk behind the payments.

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