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)

What sort of collateral do ESOP lenders require?

Lenders look for much the same collateral they would seek in a conventional loan, but if a seller is selling to an ESOP and there is insufficient collateral, they may also ask for the seller's replacement security investments (the stocks and bonds the seller buys with the proceeds of the sale) to be pledged against the loan.

Link to this FAQ Topic: Financing an ESOP