Business Cash Flow Notes

Written by Patty Yu
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Someone requiring start-up cash for a business will usually seek out loans, which then require him or her to sign business cash flow notes. Also known as promissory notes, these papers set out repayment terms of the loan, establishing a promise to pay that debt. When a person borrows money from a non-commercial lender, business cash flow notes are still highly recommended, though not necessarily required.

When signing promissory note forms, the parties usually agree on a specified repayment schedule. Amortized payments are especially common, particularly amongst commercial lenders. With amortized payments, the borrower pays equal monthly installments of both interest and principal over the course of several years or months. When the final payment is in, the entire debt is paid off.

A balloon payment following smaller monthly payments is another repayment option. Here, the borrower pays either interest-only during the smaller monthly payments, or a combination of interest and principal. At a specified time, the borrower is required to pay the remaining balance in full. For less formal loans, such as those from friends or family members, the business cash flow notes may designate a date in the future for a single payment in full.

Selling Business Cash Flow Notes

Many people end up choosing to sell cash flow notes for immediate cash in their pockets. In fact, there are many companies and individual investors who are specifically cash flow note buyers. Since business cash flow notes are always sold at a discount, savvy investors will factor in risks and purchase notes that are likely to produce a good return on investment.

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