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What happens when.....
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andystephens
Posts: 1,706 Forumite


My partner and I have actually now decided to take the plunge and buy a business. I will keep working while she runs the business so that we still have a stable income. What we want to know is what happens if things go wrong with the business and the business goes bankrupt or struggles. Does it affect our credit rating as all as it was a the business which goes bankrupt? We just want to know what happens to us if things do go wrong (Fingers crossed they wont!!!!)
Thanks
Thanks
Proud dad to Darcy.....
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If you are buying a business, is it a limited company or will you operate it as a partnership?0
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The business we want is a beauty salon, I am not sure which it is at the moment. We just want to know what happens if we fail....Proud dad to Darcy.....0
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If it is a limited company then you are right that it would be the company which would have failed. With small companies though you may have to give directors guarantees for loans or to the bank. (I assume you two would be directors of the company.) In this case, if the company fails, then your guarantees could be called in and what happened then would depend on your financial situation at the time.
However I don't myself know enough about credit scoring and the cross referencing that goes on to know whether simply being a director of a failed company would be caught by the credit reference agencies.
If the business were operated as a partnership then there isn't really an identity which is totally separate from the individuals in the partnership. You sink or swim together.0 -
Are you buying the business as a limited company i.e. are you buying the shares, or are you buying the assets?
I agree with LittleVoice that you will almost definitely be required to provide personal guarantees to the bank to borrow the money to invest. Have you sorted your finances yet? Try to get a definitive end date on any guarantees rather than leave them open ended, for example co-terminous with any term loan taken out. Bank might not agree, but then then there are other places for finance. Make sure that you have a robust business plan first.
Unfortunately not sure about the impact on your credit rating, which was the subject of your post!Today is the first day of the rest of your life0
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