Vendor Finance

Your CommShare agent has more ways to engineer the deal!

Vendor is a general term used to describe any seller of goods or services.

Vendor Bonds are used to finance the sale of businesses, goods or services giving the seller security of transaction.

You cannot rely on the Banks!

Banks are not lending to business. Even with the current low interest rate environment, the strict prudential (bricks & mortar) requirements of the Banks on business lending make it impossible to borrow on the merits of the business alone.

Vendor Finance

Vendor finance is often used when a business or other high-value asset is being sold but the purchaser due to a lack of sufficient collateral security is unable to obtain the total amount of funds from the Bank required to settle the transaction. In that case, the Vendor may agree to issue a Vendor Bond to finance the deal.

A Vendor Bond provides a convenient way to Vendor finance the sale of personal property such as a (leasehold) business, goods or services.


What are Vendor Bonds and how do they work?

A Vendor Bond is issued by the vendor (the seller) of a business, goods or services to fund the sale.

A Vendor Bond is a written promise, legally enforceable, to pay, on demand, or on one or more specified dates, a specified sum and sets forth the terms and conditions of the loan arrangement between the Lender (the Vendor) and the Borrower (the Buyer).

An example of a Vendor Bond.
Terms & Conditions are usually printed on the back.

vendor is a person or company that sells a business, goods or services to another company or individual.

If you’re thinking about taking a loan from a Vendor to acquire their business, good or service, it is essential to put the terms in writing to minimise the chances you could have a future disagreement that ends up in court.

A Vendor Bond avoids such disagreements or misunderstandings over terms of a loan agreement by clearly defining important details, like interest rate, late payment penalties, and payment timeframes.

A Vendor Bond provides concrete evidence of the loan terms if a question ever arises.

An application for a Vendor Bond may be completed and ordered by the borrower (the Buyer) or the lender (the Vendor). The Applicant can be an Individual or a Company.

 

Thinking of Selling your Business?

List it with your nearest CommShare Agent

Banks no longer lending to business! We can help engineer the Sale by setting up Vendor Finance. Vendor finance through the issue of a Vendor Bond may be appropriate when a purchaser is having problems getting a bank to finance the purchase of a business. Issuing a Vendor Bond will often allow the vendor of a business to get the price they’re looking for.

Issuing a single Vendor Bond provides an easy way to quickly set up vendor finance & repayment terms, making your business more affordable to potential buyers.

Vendor Bond is a written promise, legally enforceable, to pay on demand, or on one or more specified dates, a specified sum and sets forth the terms and conditions of the loan arrangement between a lender and the borrower.

Other Alternative Business & Property Development Funding Solutions

Equity Capital

Equity capital is contributed in return for a share of ownership. It’s not repayable, demands no provision of security (other than the issued shares) and bears no interest.

Debt Funding

Debt securities are issued securities that have a right to participate in interest payments on a regular basis. Types of Debt securities SMEs might issue are; Loan Notes, SME Bonds, Convertible Bonds, Convertible Notes and Realty Bonds.

Convertible Bonds

Issuing a Convertible SME Bond can be a way to fund your initial capital raising costs and get your equity capital raise off the ground. The advantage of issuing convertible bonds is that, if the bonds are converted into shares, the company’s debt vanishes.


Be your own Bank and negotiate a mutually beneficial deal.

Once in receipt of your order, we will provide the nominated Vendor with a Terms Sheet
for completion and return for acceptance, amendment or otherwise.