Convoluted Business Finance Question

AKFFPM · #1 (**permalink**) 01-27-2008, 09:46 PM

I have a question about a small business purchase. A business partner and I are getting ready to purchase an established small business. It is an occupational training center. My partner has immaculate credit and mine is pretty dinged up. So we were intending to get the loan in his name in order to get a better all around loan. I want to make sure that I share in the loan liability. Also, the business needs to be transferred to my name due to several instructional licenses that I hold tht my partner does not yet have. So my questions are as follows;

-Is there a small business loan type that will allow me to be listed on the loan as sharing in the liability but does not incorporate my below average credit into the loan calculations?

-Are we able to transfer the business license into my name only when the loan is being taken out in his name only? Will the bank allow that?

brian · #2 (**permalink**) 01-29-2008, 12:39 PM

The first thing that comes to mind is that you're taking all of the ownership but leaving your partner with all the liability - which may create serious tensions over the long term.

Have you actually set up any kind of partnership agreement, making clear the shared liabilities? For example, are you setting up a company with shares allocated between you both, or just to yourself?

IMO you definitely need these issues first, because no matter how well founded everything else, this is a real achilles heel, and one you need to take advice on if not already.

Dru · #3 (**permalink**) 02-01-2008, 12:17 AM

Not to mention that each of you bring different value to the table and getting that agreed value down on paper beforehand, is essential to every agreement that will follow.

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