Selling Guide

Published April 07, 2021

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Can an employer provide subordinate financing?

Eligible Repayment Terms for Employer Subordinate Financing

If the subordinate financing is from the borrower’s employer, it does not have to require regular payments of either principal and interest or interest only. Employer subordinate financing may be structured in any of the following ways:

  • fully amortizing level monthly payments,
  • deferred payments for some period before changing to fully amortizing level payments,
  • deferred payments over the entire term, or
  • forgiveness of the debt over time.

The financing terms may provide for the employer to require full repayment of the debt if the borrower’s employment is terminated (either voluntarily or involuntarily) before the maturity date of the subordinate financing.   Refer to B3-4.3-08, Employer Assistance, for additional information.

For additional information, see B2-1.2-04, Subordinate Financing.
 

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