My wife owns her own business paid for from equity within our house. It is a leasehold business is now profitable.
We would like to buy another business but would rather not use any more equity.
Can the business be used as collateral for a loan. We are looking at two business possibilities, one owned privately, one franchise.
krystnors
What's a leasehold business mean?
Anything can be used as collateral for a loan but I would suggest you are not in the same league as the businesses who are able to do that. You will be able to use certain business assets as collateral though.
In message , krystnors writes
Not unless it is incorporated and the value of its intangible assets in a 'gone concern' analysis plus any other tangible security is sufficient to satisfy the lender. This would enable the existCo to give a guarantee to the lender to NewBiz which would be supported by a Floating Charge from existCo. For the guarantee to be effective there would need to be a beneficial relationship between the two businesses and both would need to bank at the same place..
Not relevant to your question. Even with the Franchise your bit of the business would be privately owned.
However, buying into a quality established franchise is likely to be helpful when your lender is considering whether you can repay your borrowing.
Food for thought, John, thanks.
One of the businesses would sit and work very well with her present business.
krystnors
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.