Step 1: The company borrows money from a third party lender (the “Outside Loan”)
Step 2: The company loans the money to the Employee Stock Ownership Plan (the “ESOP”) and receives a note in exchange (the “Inside Loan”)
Step 3: The ESOP uses the internal loan proceeds to purchase stock from the selling shareholder(s) in exchange for cash and/or a promissory note (the “Seller Note”)
