Employee Stock Ownership Plans

Opportunities for Employee Stock Ownership Plans

An Employee Stock Ownership Plan (ESOP) can provide significant tax benefits and wealth creation opportunities for a company’s owners and employees. Using an IntraFi Local Credit loan, companies can increase the immediate liquidity and diversification opportunities available through an ESOP.

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In many ESOP conversions, a newly-formed ESOP purchases part or all of a business using a combination of bank debt and seller notes. Because the available bank debt often does not exceed 30-40% of enterprise value, the existing owners receive only partial liquidity, while continuing to hold a large residual balance in notes, equity, or other instruments.

How We Help

IntraFi Local Credit loans can help support ESOP transactions at each stage of their development, accelerating an ownership transition or facilitating ongoing employee ownership:

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Newly-Formed ESOPs

For companies that are establishing an ESOP, an IntraFi Local Credit loan can augment a bank loan to provide additional liquidity and wealth diversification for legacy owners at inception.

Partial ESOPs

For ESOPs that have been initiated but not yet completed, our capital can help accelerate the transition to employee ownership, more rapidly redeeming the holdings of legacy owners.

Wholly-Owned ESOPs

For ESOPs where ownership has been fully transitioned, our loans can provide liquidity to address outstanding repurchase obligations or to provide wealth diversification for employee-owners.

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