Selling your note versus borrowing from a bank. Which one gives me the advantage?

Even though you won’t get the full value of your contract, a cash flow note sale is still more profitable. There is a concept called the time value of money, which says that your money’s present value is always more than its future value. This is because you can invest your money now and start earning interest. By the time the note is paid in full, you would have earned the difference with your investment – and with much less risk.

A cash flow notes sale can also be more convenient than a bank loan. You can sell your note in two weeks or less, while a bank will make you wait up to a month as they review your case, assess your credit, and do a dozen other checks. Of course, there will be no obligations either, since you will be selling, not borrowing.

How much will my note be discounted?

Many factors will affect the current value of your note. Note appraisals are based on individual risks and graded accordingly. If you are selling a real estate note, these will include: a) where the property is located, b) the type of property secured by the note, c) the value of the property, d) the interest rate on the note, e) the terms of the note, f) how long it will take to collect all the payments, g) the equity in the property, h) the payment history of the note, i) the amount of seasoning on the note, and j) the payor’s credit rating. Similar factors will affect the value of business notes, and other types of cash flow notes as well.