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Permalink Reply by James White on July 24, 2011 at 8:04am

That's my opinion as well. Thanks Harry. Any other opinions or experience with this type of thing?

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Permalink Reply by Sandra Allen on July 25, 2011 at 7:40am

I agree with Harry.  Without going into the specifics about the loan/note, recordation of it, business structure, etc... WHY NOW?  I would make it a requirement that they cease the start up business until the close of the transaction or refer them to another broker who would want the headaches.   Remember, the investor is taking a short on payoff.  If the borrower has access to large sums of money with the plans of starting a business, they may not appear to be that much in distress.  If you owe me money and I see you getting a loan from a family member to do something else rather than pay me, I might be just a little upset and not take you too seriously.

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Permalink Reply by Wendy Rulnick on July 25, 2011 at 12:03pm

James - If they want to start the process now, then so be it.  It sounds like their situation is going to bring forth a request for a cash contribution and prom note from BOFA/Guaranty anyway, with a solvent business.  Whether it's in three months or six months, the picture probably won't change much.  I'd say if they are willing to be realistic about the potential to be asked to "share in the loss", then do it now.

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Permalink Reply by James White on July 26, 2011 at 4:11am

Thank you Sandra. I appreciate the input. The "why now" is no income and the father helping the family by supporting a business. Not great timing I agree. However, the seller has no financial stake in the business, and no income either.

Sandra Allen said:

I agree with Harry.  Without going into the specifics about the loan/note, recordation of it, business structure, etc... WHY NOW?  I would make it a requirement that they cease the start up business until the close of the transaction or refer them to another broker who would want the headaches.   Remember, the investor is taking a short on payoff.  If the borrower has access to large sums of money with the plans of starting a business, they may not appear to be that much in distress.  If you owe me money and I see you getting a loan from a family member to do something else rather than pay me, I might be just a little upset and not take you too seriously.

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Permalink Reply by James White on July 26, 2011 at 4:16am

Thanks Wendy, I've already told them there will probably be a cash contribution requirement especially from Guaranty Bank. I think however it might be better to wait until the fathers funds have seasoned in the business account and are wiped from the personal account reflecting a true picture of the sellers finances.

Wendy Rulnick said:

James - If they want to start the process now, then so be it.  It sounds like their situation is going to bring forth a request for a cash contribution and prom note from BOFA/Guaranty anyway, with a solvent business.  Whether it's in three months or six months, the picture probably won't change much.  I'd say if they are willing to be realistic about the potential to be asked to "share in the loss", then do it now.

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