Business Loans - Advice needed

[glyn696486]

Good Afternoon All,

Looking for a bit of advice about how business loans work. As along a standing employee of a multi national company I have never had any experience of how smaller company's work.

Let me first set the scene;

My girlfriends father is a partner in a small but successful textile company with two other partners. One of the partners wants out so there is a potentially a share to be had. My girlfriend also works at the company, but just as an employee at the moment. The plan would be to buy the partner out and make her one of the partners.

From a financial point of view we do not have available funds to do this at the moment I think the share is worth around circa £500000.

Therefore does any one have any suggestions as to how we could do this. I am guessing the easiest way would be to get a business loan, however like I said I have no previous experience. Would we need to put any personal money in to get the loan??

Any advice greatly appreciated.

Kind Regards

Glyn

[MB2]

It will depend on a few things, but mostly the relationship the other directors/owners have with the bank and how profitable the company is.

Depending on its cash reserves taking out 500k could cause issues with the bank and suppliers (even if it is replaced as a loan as that will show up as a short term liability).

Banks generally are not keen to advance more than 250k backed by personal guarantees or take houses etc. these days or as an OD so they may need to look at a diffent way to buy him out - maybe a staged buy back over a number of years as the company can afford it.

Need to clear if they are expecting her to get a loan and inject personal money or the business to borrow it to buy him out and they are appointing her as a partner at the same time.

Are they partners or is it an ltd as rules are quite different for partnerships as all partners are liable for the business' debts and so a staged buy back may be much harder to arrange ?

[Matdaytona]

Good Afternoon All,

Looking for a bit of advice about how business loans work. As along a standing employee of a multi national company I have never had any experience of how smaller company's work.

Let me first set the scene;

My girlfriends father is a partner in a small but successful textile company with two other partners. One of the partners wants out so there is a potentially a share to be had. My girlfriend also works at the company, but just as an employee at the moment. The plan would be to buy the partner out and make her one of the partners.

From a financial point of view we do not have available funds to do this at the moment I think the share is worth around circa £500000.

Therefore does any one have any suggestions as to how we could do this. I am guessing the easiest way would be to get a business loan, however like I said I have no previous experience. Would we need to put any personal money in to get the loan??

Any advice greatly appreciated.

Kind Regards

Glyn

thats some valuation for a small business is there freehold involved?other than that massive profits to value it at £1.5mil if your girlfriend manages to get a loan factor in repayments and see if the remuneration is worth it if its a ltd co makes more sense for her father to acquire a 51% stake then he has controlling interest and he can appoint who he likes to the board banks will give you an umbrella when its sunny and take it away when it rains