What is the best type of Business agreement/contract for a short term business partnership?

If I start-up a company then realize I will need more financing and decide to get a short-term partner say only for a six month period, with the partner only contributing about 25% cash only and will not be needed to assist in day to day operations, what type of agreement should be made, how much information should they be entitled to, and how should they be paid at the end of a dissolution of the agreement beside repayment of the initial investment with interest.
Anonymous User
Anonymous User
Asked May 06, 2012
Edited May 06, 2012
Start-up businesses are a high risk investment. Looking at it from the partner's point of view, if the business fails, the partner loses all of their money and if it's a smash hit, they get six months interest? As an investor I wouldn't do that deal at a 50 percent interest rate.

If you have collateral, apply for a conventional business loan and negotiate the best interest rate you can. If you don't have collateral you will most likely have to trade long term ownership to get the money and, unless you have patented a way to turn water into gasoline, expect the investor to be in the driver's seat.

Rob
Answered May 06, 2012
Lets say the investor was a relative, and their less than 25% cash investment will be repaid in the six months without regards to the success or failure of the business. The question again would be, what type of partnership should be made, if any, how much information should they be entitled to, and how should they be paid at the end of a dissolution of the agreement beside repayment of the initial investment with interest. Since it is short-term I was thinking maybe it should be treated as an investment versus partnership but not sure which is appropriate. Not sure why the investor would have to be in the driver's seat when the investment is cash only which would be less than 1/3.
Skyy May 07, 2012
A partner is an owner. They would be liable for debts the company made if it's a partnership. Suppose you sign up as a minority partner in a business we own together and I go buy a new car in the company's name? If the company fails both owners are liable for paying the car payment.

A personal (you pay it back if the business fails) loan is all you need. Suppose, for round numbers, you're borrowing 1,000 dollars at a ten percent annual interest rate. That would be fifty dollars interest for six month. Get a blank promissory note and fill it out that you promise to pay them 1,050 dollars in six months.
Rob May 07, 2012
A venture capitol investor would be in the driver's seat because it's their decision whether or not to loan the money and anybody with any business sense knows that start up business loans are very high risk. The fact that you're borrowing from a family member probably makes that different in your case though. If you were dealing with someone trying to make money from the investment, they would make the rules if you want the money.
Rob May 07, 2012
Be very careful forming business relationships with relatives. Those tend to be more emotional and less rational. Make sure everything is spelled out in writing, both parties agree on what the writing says, and both parties uphold their obligations to the letter.

I agree with Rob totally. It sounds like a personal loan is the best fit for what you want. Do a promissory note. You can find free standard templates online.
Thanks much, this was very helpful.
Skyy May 08, 2012
Business agreement should be made legalized and it needs with the proper process.http://tldr.me/2v18irrp
katerichards
Answered Jan 17, 2015
Yes I agree with katerichards agreement made should be legal.http://goo.gl/DfLdWZ
samanthainglis
Answered Jan 25, 2015
When it have a business it should be legal and permit.
harisson
Answered Jan 25, 2015
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