Entity Structure for Loan

Hi, thanks for allowing me aboard.

Situation: a few family members wish to start a business. 1 of the members has a property owned outright that they will put up for (Security/Guarantor) for the business.

I assume a Commercial Lease would require a Director etc Guarantee along with a Leasing Company for Equipment?

What would be the best way to structure the business so as to access finance against the property? I myself already have a company which I am the sole director and only 2 employees inclusing myself (this current buainess will continue in the future for a period anyway).

any input appreciated.

Thank You

 

no

That is something you will need specific legal advice on.

Your mate could borrow in his own name and then onlend to the entity conducting the business or the entity conducting the business could borrow using his house as security or the equipment as security.
There are a lot of legal and tax issues to consider as well as the lending issues. One will allow for a capital loss to be claimed if the business fails, the other won't.

 

The person who owns the property is on a GOV pension, so cant access the equity on his own aa it stands. I was told, whether true or not that the person who is putting up the security/Guarantor has to he tied into the business to access the equity. So if he was made a Director etc that would tie them into it.

 

What's the benefit for this person putting up security, what's their age?

 

The person is late 60's. The benefit is they would be helping out a family member and themselves ie: diaposable income.

 

you are confusing a business with a company, 2 different things. But that will make it difficult.

You should also beware of risk, elder abuse allegations and other legal issues.

 

If the pensioner lives in the property being offered for security I wouldn't touch it, has potential to end pretty bad, they are the one taking all the risk.
Most lenders don't like securing debt against a pensioners owner occupied place of residence either.