I have a partner in business. He has had a bankruptcy two years ago. We are getting a million dollar loan from the bank but they won't loan with my partner as an owner. How can he keep his position in this scenario?
3 Answers from Attorneys
It is likely difficult to keep your partner in the same position as banks consider a number of criteria when providing a loan to a business, including the personal finances of its owners. You could try other banks including a credit union to see if they are more willing to provide you with a loan considering your partner's financial history.
There are alternative solutions to your problem, but I cannot think of any that will keep your partner in the same position. Feel free to contact me should you want to discuss your situation further.
The bank controls the money. I would suggest trying someone else if the two of you want to remain as partners. It is really your call as to what you want to do. You also have the option of forgoing the loan or maybe trying to get a lesser amount.
The short answer is: he can't. You might try another source of funding, but what you definitely don't want to do is make some secret arrangement as a means of deceiving the bank.
The takeaway for you is that it is important who you partner with. You become legally responsible for your partner's debts, even if the two of you intend otherwise. (A partnership agreement may say you both have to approve all debts of the partnership, but that is not binding on third parties.) If the bank considers him a risk in handling money, perhaps you should take that seriously.
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