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How Can an ESOP Be Financed?

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In this video, we discuss the different types of ESOP financing.

 

Transcript

There are various forms of ESOP financing. First, an ESOP can borrow money directly from a bank to fund a transaction. Second, a corporation can lend money to the ESOP to fund the transaction. Third, a corporation can borrow money from a bank, lend it to an ESOP to finance the transaction, and then finally an ESOP can borrow money directly from the seller typically by giving the seller a promissory note for the purchase of the shares. A combination of these financing methods might be necessary to complete an ESOP transaction.

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