So many things have occurred over the last 18 months for small businesses that as we come out of the pandemic, many of us are still looking for ways to do things better, different. Some of these changes have caused many business owners to consider if it’s time to buy out a business partner. At one time, a partnership may have seemed like an idea that would stand the test of time, but as the company has evolved, an association may not be the best structure anymore. If you are considering buying out your business partner, you must evaluate the pros and cons of this strategic play.
Pros of Buying Out Your Partner:
• You don’t have the split the profits
• You are the lead decision-maker. You don’t need to sell someone else on your vision
• If your partner’s actions are not driving the company’s results, you don’t need to be concerned with him.
Cons Of Buying Out Your Business Partner:
• You no longer have someone to split the risks
• You no longer have someone to bounce ideas of and create value with a substantial investment in the company.
How to Fund A Partner Buyout
If buying out your business partner is the right move, the next thing you will need to do is decide how you will receive the funds to buy out your partner.
Here are a few options to consider to get the funds you need:
• Bank Loan
• Merchant Cash Advance (MCA)
• Unsecured Working Capital
Let’s take a look at each of these solutions.
Business Bank Loan
A traditional bank loan will be your most attractive offer in terms of interest rates and loan terms. However, a Business bank loan is also a very tedious paper-intensive process. in addition, many traditional banks will not offer these types of loans since the money will not be used to grow and expand the business. With the combination of a lengthy process and the limited amount of banks that will fund these loans, many business owners go to MCAs or Merchant Cash Advances for these loans.
Merchant Cash Advance
If you rely on credit card sales and in-store transactions like retail stores, Merchant Cash Advances could be an excellent resource for you. Here is how it works: Lenders act as if they are your customers, and they pay for customers’ products upfront, which you pay back with interest. MCA loans are easy to obtain, but they come at a higher cost that will impact growth if your company does not have high-profit margins.
Working Capital Loan
An unsecured Working Capital Loan is another excellent option if you are looking to buy out your partner. Working capital loans are easier to get than many other types of loans as long as you have the revenue to support them. Suppose you can show that your company is growing and profitable results, This type of loan can be perfect. When applying for a working capital loan through JaScott, collateral is not required for many industries such as restaurants, auto repair shops, Home Health, medical offices, and many more. We can provide up to amounts up to $675,000 for multi-unit business.
With a working capital loan, you can enjoy flexible payments, quick funding, and you do not have to provide as near as much paperwork to get approved. In many cases, we do not need to see financials or tax returns.
If you would like to explore this option, you can apply online through our website or set up a meeting to have a quick 15-minute call to connect with one of our experts. There are no upfront charges to start the process, as well as no obligations to take out the loan if you are approved.
When you are ready to take the next step to buy out your partner or need money for expansion, we will be here to help.