Donnie:
If it's a personal loan to fund one individual buying out the other, then the only collateral that a bank can have is, (1) whatever assets the individual buyer has, and (2) the XX% ownership in the business that they are funding. Banks will not put much value on a non-controlling percentage of a private business since their ability to sell that percentage is virtually nil. So it comes down to personal assets.
OR the person selling you their piece of the business does their own financing, taking $20% down, and the rest payable over time. As collateral, you pledge the ownership that you bought.
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Greg
Rockville MD
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