Financing a partnership

[trekxc]

I want to buy into the small business which employs me. It's owned by a sole trader but he's open to partnership He's getting near retirement and looking to reduce his involvement with the business. A colleague is also interested in partnership but has no savings due to a house build and family illness.

The problem is, with my own house purchase and multiple maternity leaves in the last few years I have no savings and a mere 20k equity in my house. So how on earth could I fund it? Would the bank lend me the lot against the stake in the business?

Business is very robust and secure. I know I could do it if I could afford it.

Bump

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There are many ways to do this, you need to see an accountant who will recommend the best way forward ensuring that any money you do put in goes to him and not the tax man.

Thanks - at least I now know where to go for help! :)

If you are already working in the business the business' own bank will often look favourably on you with regards to a business loan. They are likely to want a business plan showing how you intend to pay the money back and some life insurance to cover the loan amount.
I borrowed a considerable sum for a similar purchase in October and had to jump through these hoops.
If you do go ahead make sure you have a good partnership agreement preventing him from taking his feet off the peddles, but still taking the same profit share - I have seen it happen fortunately not to me.
Always remember the piece of advice that was given to me at the start ' a partnership is more difficult than a marriage as partners often have widely different aims within the partnership'.
I was a partner for 7 years, but have now become a sole trader and actually it is easier.

Lonecat I think you know exactly what I'm talking about :)

I've just got no buffer of funds at all, and a modest credit card balance I'm dealing with before I can start saving. It feels quite soon after having the DC to be doing this but I don't want to be stagnating here forever if there are no prospects.

Apart from checking that l wasn't massively overdrawn my personal/household finances didn't come into it.

Mr Anchovy gives great advice, however I did achieve all of it with no input from my accountant (who I love). I took the first leap when DD was 15 months old now she is 9 our quality of life is definitely better.
If you have suspicions you are in the same line for pm me as I can give you more specific advice.
My current loan is funding for lending which has some disadvantages, but these are out weighed by the advantages for me.

Massively overdrawn? Who me?! Best think about clearing that up too! I'll pm you, thanks :)