onlyway019
New member
My partner is currently working for his family's small business. His father started an LLC with a co owner and they got a business space a few months ago. Eventually my partner and his brother will fully take over the business after his father retires.
It is a small eatery that opened it's doors last month. Because it just opened, the business has been really slow due to a less than desirable location and not many people know about the place or even stop by. I believe it has great potential as the food, staff/service and business concept itself is solid. It still goes to say that everyone still been worried that it's not going to do well and were in the talks of getting extra financing which they believe would allow their business to be successful. They are currently breaking even on their profit vs expenditures. The only staff employed are my partner, his brother and his parents.
His father applied for a small business loan of $300k which will be issued after the business has been 6 months in operation.
my partner and his brother asked me to also lend my financial support by applying for a personal loan and giving the amount to the business so they can start improving the business immediately while they wait for the small business loan. They were discussing a 30k amount or less, depending on how much I would qualify for or get approved for. They want the smaller personal loan to be used to apply for a liquor license and renovate for some seating as the biggest complaints the customers had were 1) they want beer and wine served and 2) they want to sit down and eat. The restaurant is currently take out and delivery only so the space was small to begin with.
With the larger 300k business loan his dad applied for, they were talking about buying the space next door to the business to expand more space and accommodate more sit downs, and pay out the current tenants to leave. They want to change the electric stoves to gas range stoves. After getting the money they also want to talk to the city and officially change to become a sit down dine in establishment. ultimately his father wants to pay out his co owner his 60k that he invested and tell him to be on his way because he no longer is interested in participating and has been unreliable as co-owner.
After his father gets the amount from the small business loan, he would use a portion of that to pay off the personal loan that I would potentially apply for. After all is said and done, they say I'll be a silent investor (while my partner and his brother run the operations) and receive 15% share of the business.
I have a few concerns about the role they want me to play. I consider it a lot of risk for me to take out a personal loan to help their business. If things do not go well, I am ultimately liable for the entirety of the loan as I would be the signer and if I cannot afford to pay it, it can devastate me financially. I work a good job but I also still have a lot of debt and my credit score is under 700 due to rough financial situations after I left college few years ago. If I was wealthy enough, I wouldn't have a problem gifting them an amount and helping out but I do not have the luxury to do so in my current situation.
I also am concerned if there are any legal implications that would come out of this situation. There's a chance the co owner would refuse to leave if he changes his mind and wants to still continue being involved. The tenants they want to pay out to leave the premises so they could expand could refuse to leave and may seek legal action. They have not yet discussed with the city to convert to dine in yet. I also am concerned that they're going to use one big loan to pay off one little loan and pay out one business partner to leave which doesn't seem like the best use of the finances.
I suggested my partner and I to speak with a financial advisor / investment advisor and perhaps a business lawyer regarding this issue and have everything in writing on clear terms and conditions if I were to consider helping them. He declined my proposal to speak to any professional and did not mention what he would do to have it in writing. I have asked my partner why nobody else bothered to help or apply for a loan and he said that he already asked and I was the last resort.
I spoke to some business owner friends of mine and they suggested that it was a low risk idea and that I should do it to support my partner and his business, and the loan I take out can ultimately build my credit. And if we get married some day I'll also have a vested interest in the business
I also had some friends suggest that the whole personal loan and business loan together was a bad idea, saying money, business and family do not mix and that my partner should wait until the 6 months is here and just use the small business loan money instead.
The thing is I care about the business's success because it is my partners livelihood. I genuinely do want to do what I can to help out if possible but I don't think that my applying for a personal loan to give the funds to them is beneficial. And the situation on how they're going to handle it seem strange to me. This is my partners first time running a business and I'm worried that his inexperience in handling this situation will be his downfall. I also don't have a lot of business acumen either.
I guess what I want to ask is what would any of you do in this situation? Tell them to kick rocks and wait for the small business loan after 6 months.. apply a personal loan to give them.. or something else? What else can be suggested to help their business succeed?
It is a small eatery that opened it's doors last month. Because it just opened, the business has been really slow due to a less than desirable location and not many people know about the place or even stop by. I believe it has great potential as the food, staff/service and business concept itself is solid. It still goes to say that everyone still been worried that it's not going to do well and were in the talks of getting extra financing which they believe would allow their business to be successful. They are currently breaking even on their profit vs expenditures. The only staff employed are my partner, his brother and his parents.
His father applied for a small business loan of $300k which will be issued after the business has been 6 months in operation.
my partner and his brother asked me to also lend my financial support by applying for a personal loan and giving the amount to the business so they can start improving the business immediately while they wait for the small business loan. They were discussing a 30k amount or less, depending on how much I would qualify for or get approved for. They want the smaller personal loan to be used to apply for a liquor license and renovate for some seating as the biggest complaints the customers had were 1) they want beer and wine served and 2) they want to sit down and eat. The restaurant is currently take out and delivery only so the space was small to begin with.
With the larger 300k business loan his dad applied for, they were talking about buying the space next door to the business to expand more space and accommodate more sit downs, and pay out the current tenants to leave. They want to change the electric stoves to gas range stoves. After getting the money they also want to talk to the city and officially change to become a sit down dine in establishment. ultimately his father wants to pay out his co owner his 60k that he invested and tell him to be on his way because he no longer is interested in participating and has been unreliable as co-owner.
After his father gets the amount from the small business loan, he would use a portion of that to pay off the personal loan that I would potentially apply for. After all is said and done, they say I'll be a silent investor (while my partner and his brother run the operations) and receive 15% share of the business.
I have a few concerns about the role they want me to play. I consider it a lot of risk for me to take out a personal loan to help their business. If things do not go well, I am ultimately liable for the entirety of the loan as I would be the signer and if I cannot afford to pay it, it can devastate me financially. I work a good job but I also still have a lot of debt and my credit score is under 700 due to rough financial situations after I left college few years ago. If I was wealthy enough, I wouldn't have a problem gifting them an amount and helping out but I do not have the luxury to do so in my current situation.
I also am concerned if there are any legal implications that would come out of this situation. There's a chance the co owner would refuse to leave if he changes his mind and wants to still continue being involved. The tenants they want to pay out to leave the premises so they could expand could refuse to leave and may seek legal action. They have not yet discussed with the city to convert to dine in yet. I also am concerned that they're going to use one big loan to pay off one little loan and pay out one business partner to leave which doesn't seem like the best use of the finances.
I suggested my partner and I to speak with a financial advisor / investment advisor and perhaps a business lawyer regarding this issue and have everything in writing on clear terms and conditions if I were to consider helping them. He declined my proposal to speak to any professional and did not mention what he would do to have it in writing. I have asked my partner why nobody else bothered to help or apply for a loan and he said that he already asked and I was the last resort.
I spoke to some business owner friends of mine and they suggested that it was a low risk idea and that I should do it to support my partner and his business, and the loan I take out can ultimately build my credit. And if we get married some day I'll also have a vested interest in the business
I also had some friends suggest that the whole personal loan and business loan together was a bad idea, saying money, business and family do not mix and that my partner should wait until the 6 months is here and just use the small business loan money instead.
The thing is I care about the business's success because it is my partners livelihood. I genuinely do want to do what I can to help out if possible but I don't think that my applying for a personal loan to give the funds to them is beneficial. And the situation on how they're going to handle it seem strange to me. This is my partners first time running a business and I'm worried that his inexperience in handling this situation will be his downfall. I also don't have a lot of business acumen either.
I guess what I want to ask is what would any of you do in this situation? Tell them to kick rocks and wait for the small business loan after 6 months.. apply a personal loan to give them.. or something else? What else can be suggested to help their business succeed?