Carrying All the Risk

[Kameeka Shirle]

Hello, my business partner and I are looking to acquire a daycare business and the real estate. She had the knowledge on how to run the business, but her credit would not qualify for the loan and the bank is saying that if we go through with the loan, I would be the sole guarantor on the loan. I would have 85% ownership. How would we structure our partnership or this deal such that I could be compensated for the additional risk I'm taking on?

[Dwayne Poster]

At 85% there’s not much left for the partners return to justify the labour input, unless it’s managerial. I think you are cutting it too thin for a working partnership. A basic wage will likely exceed that level, and to protect your interest, I would calculate that in for eventuality.