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What are My Options if a Key Employee with Limited Funds Wants to Buy My Business?

Q: A key employee wants to buy my business but doesn’t have that kind of money.  Any good options?

JT says: Yes, options exist.  With solid financials, many SBA-backed lenders will accept a 5% down payment from a key employee.  If they’re already a partial owner, they may even qualify for 0% down with 100% financing.  Depending on your situation, it might be the perfect solution for transactions up to $5M.  Plus, you benefit by receiving your sale proceeds up-front with a nominal (or non-existent) carry-back note.  

Additionally, options may include a Stock Redemption Plan or an array of Phantom Stock structures.  Both can be tailored to your specific needs and timelines.  

When considering a sale or transition, these options deserve a closer look when there’s a willing key employee.

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