A Quick Guide to Getting a Partner Buyout Loan for Your Business

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A Quick Guide to Getting a Partner Buyout Loan for Your Business

Partner Buyout Loan

Managing a business with a co-owner is great, especially if you know your partner on a deep level and have formed a strong professional relationship in your time working together. But if things suddenly change and one of you decides that it’s time to start following different goals, it’s possible to go your separate ways.

Whether you realise you have different visions regarding your business or someone simply wants to achieve better opportunities, one way you can consider to save your finances is by applying for a business loan. You can fund your partner buyout financing through different ways, including a merchant cash advance or equity financing.

A merchant cash advance is suitable for businesses with plenty of credit and debit card sales, while equity financing grants investors the authority to take over your partner’s shares. Keep reading below to find out how to use a business loan to buy out your partner and keep your company thriving despite the changes.

How a Partner Buyout Works

Before you apply for a business loan for your small business so you can buy out your partner, you will first have to come to a decision with them regarding the value of your company. During the beginning of your partnership, co-owners sign a shareholder agreement stating business policies—which include what measures to take if a partner buyout happens.  

The agreement acts as your guide for you and your partner to help you come to terms and undergo a buyout without any problems. In some cases, you can expect a shareholder’s agreement to be outdated, especially if your business has expanded over time.

As a result, you and your partner should strive to make a deal regarding how much your business is truly worth. If you are having a challenging time figuring out its value, you can seek the assistance of a professional to provide an independent valuation where both sides don’t suffer too many losses and, instead, receive what you and your partner rightfully deserve.

Getting a Partner Buyout Loan vs. Other Business Loans

When it comes to applying for a loan, those who use the money to improve a business’ ROI and provide investment have better chances of being approved. Unfortunately, lenders are less likely to look favourably on loans intended to buy-out a partner, as these aren’t directly related to obtaining an ROI.

Since you’re buying out your partner’s shares, the money involved will go directly to the hands of your departing partner—so your company won’t be getting ROI from the transaction. But if your business has a stable revenue and reliable profits, it’s still possible to achieve a partner buyout loan.

Fortunately, numerous loan companies offer small businesses partner buyout loans to guide company owners and entrepreneurs through the process of buying out your business partner successfully. It’s a good idea to rely on lenders than on the government for business grants and financial support because they don’t focus on providing partner buyout loans.


When you and your business partner decide that separating is for the better, you will have to take the time to discuss the terms and getting proper business valuation to prevent complications. Asking for financial advice from specialists is also necessary to avoid misunderstandings and potential issues from occurring.

Are you looking for small business loans in Australia to finance your partner buyout loan? Business Loan Experts offers businesses financial plans to cater to your company’s needs. Get in touch with us to apply now!

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