International Trade

Cash Flow Notes are contracts where the document promises that the borrower will repay the lender. There are more than sixty types of cash flow notes currently. There are many companies that trade the note for cash if you are the holder of the note and want to have cash up-front instead of waiting on note payments. I will outline some of the most common Cash Flow Notes.

Perhaps the most common Note is a Real Estate Cash Flow Note. These notes are for money that is loaned with property as collateral on the note. These are common for private residences, businesses, and mobile homes. These notes can also apply to other real property like boats and cars. Another common note is a structured settlement. A structured settlement is financial installments that are paid out over time. This type of not is generally secured by a life insurance policy that is paid out by annuity payment over time.

The third type of common note is a business cash flow note. These are secured by the property of the business and the assets owned by the business entity. This is a rather complicated form of note and it normally takes professional assistance to draw one up. An attorney or financial advisor may be able to help with creating this sort of note.

The fourth type of Note is a seller carry back note. A seller carry back note is the most common form of seller financing and is often used in small business transfers because of the difficulty that can exist when an individual looking to purchase a small business applies for traditional loans. This type of note is normally secured by real property as well as assets.

One lesser-known form of Cash Flow is purchase order funding. With purchase order funding a business secures a Cash Flow Note by securing it with purchase orders. These must be reliable purchase orders from reliable clients. This can be a large risk for both the borrower and the lender because this form of security is intangible and not as reliable as other forms. There are investors who aim to make a profit by exchanging long term annuities for a lump sum of cash. These investors allow the holder of the annuity to sell it for less than it would be worth if paid out over time. Many people find this an appealing option to sell their note for cash up front and all at once.

Cash Flows are quite common and they serve many personal as well as professional purposes. Many like these notes because they offer flexibility and options that may be outside of the norm. Cash Flow Notes often make opportunities available where there would have been no opportunities otherwise. These notes are serious business and no one without knowledge on them should simply jump in without doing some research. There is usually a lot of money and/or assets on the line. Be cautious when considering a note.

Want to find out more about trading the Note for Cash