want to get out of joint buisness loan HOW ???

christopher1982

Hello everyone just joined and looking for advice etc..
my situation is as follows:
i have been in building partnership for 9 yrs and registered as a partnership with tax etc. we bank with natwest and have done so from the start, i am now leaving the buisness and we have 20k debt to the bank in a 17500 overdraft and small 2500 loan.
basically ive got to buy myself out of the buisness with 10k as my ex to be buisness partner is carrying on...
i dont have a very good credit rating so lending to pay this is going to be a problem. Natwest are suggesting me to i take a personal loan out with them and the money will got to my buisness partner and i pay monthly installments back to natwest... natwest are treating me as a joe bloggs off the street asking for a loan and taking into consideration we have put 60k a year for 9yrs through there bank..
so it isnt looking good im going to get the loan at all :mad:
does anyone have any suggestions of how i can sort this???
is the bank doing the rite thing???
who can lend with decent rates???
please help me
thanks chris

Tixy

If you are leaving the partnership but want to take out a personal loan then the bank are right to subject you to a normal credit application and will want to know how you intend to make repayments, i.e where your income will come from once you have left.

What will you be doing aftewards? are you setting up in business alone? starting employment? retiring?

You say you don't have a good credit rating - what is actually on your credit file?

Is your business worth nothing at all? no goodwill or anything? if the partnerships debts are £20k then it seems odd that you have come to an agreement that you will pay half of it off and that partner is not paying you anything for your share of the business. Have you always drawn all profits out of the business each year? what else is on the balance sheet of the business aside from the debt? any fixed assets? any debtors? what creditors? have you had some professional advice about leaving the partnership? eg from your accountant.

BoGoF

I would be very wary of trying to pay your 'share' of the debt. You don't have a share. Should your business partner not pay his share the bank still have the right to come after you for the balance. You need legal advice.

christopher1982

thank you for spending the time to write back

i am going into employed status doing building as before the bank are asking for a contract to show what i am earing etc which i am waiting for by post...
as for my credit rating i have missed 2 maybe 3 payments in the last 6mnths as work has been rubbish things have bounced in my personal account. also i went to my personal bank (barclays) and applied for a basic no intrest for 56 days credit card to have some money before my 1st wage to which this got declined straight away... this tells me i dont stand a good chance at the loan. i might be wrong ???
the business has no assests apart from tools which we have split the 2 vans were on tick but they are being sold for same money as we bought them so there out of it.
there isnt any money in the business at all it has run to this debt problem now.
my business partner wants to carry on and "make it work" which is fine
we havent had professional help on this as we thought it would be quite straight forward (NOT)

Tixy

Dissoling a partnership is never as easy as it might seem (esepecially where debts are involved). I'd agree to seek some advice on this.

I think a loan does sound unlikely - maybe you can set up an agreement to repay the existing debts at so much per month between each of you and to close the account to any new spending. Then he can open a new bank account in just his name for his sole trader business and you can do the same.

But you do need to consider what happens if one can't pay because legally the debt is both of yours, and have you given PGs (personal guarantees) against this debt. Definitely seek some proper advice.

christopher1982

if he closes the account to any new spending will we liable to pay any charges on the closed account as its an overdraft or will they just say you owe us 20k and sort some kind of payment scheme between us ????

roger196

As a partner you are jointly liable for the WHOLE of the debt of the partnership. The bank does not care who it gets its money from, whereas you most certainly do.
You need to make sure that you have no further liability for any increases in either the overdraft or the loan. You need to insist that any payments you or your former partner make to the bank go to reducing the original debt and not for any other purpose. You need the bank to confirm these points in writing.
Are there any other debts eg tax?
Are all tax returns,vat returns and accounts up to date?

You need to make sure that your old customers realise that you are no longer a partner eg have letter headings been changed.

Next time you go into partnership use a limited liabilty partnership. Your personal assets will no longer be at risk, provided you don't give personal guarantees.

spadoosh

Does the business have no assets?! How come your walking away from this having to pay?! Or more to the point why is your partner continuing if the business is losing money?!