Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

If a leveraged ESOP company needs to refinance a loan from a lender to the company, does it need to adjust the terms of the loan from the company to the ESOP?

Generally, it does not. Most ESOP company loans involve an "outside" loan from the lender to the company and an "inside" loan from the company to the ESOP. The two loans can have completely different terms, within some limits.

Link to this FAQ Topic: Financing an ESOP