How To Get Out of A Bad Business Partnership

Divorce Business Style

A business partnership, like a marriage, comes with emotional and legal considerations that should really be thought out in advance. However, business owners, like newlyweds, are often blinded by the bright glow of hopes and dreams. No one likes to think "worst case" or if they do they are often referred to as "the negative one." In this age of "The Secret" and all that positive thinking implies, it is especially important that objective thinking be applied to any relationship you enter into on a legal basis.

In business, the 50-50 partnership, obligates you to either buy out a partner or dissolve your business if things aren't working out. When I say, "not working out", this does not only refer to things beyond ones control. It also refers to a partner who is consciously ripping the business off or conducting themselves in an inappropriate or destructive manner. It doesn't matter. Your partner could be robbing you blind and you would still either have to buy them out or dissolve the business. In both cases, it will cost you a lot of money in legal fees and in lost productivity.

Having been through a series of partner dissolutions, my advice to small business owners is as follows:

  1. If you can do it without a partner, I highly recommend you fly solo. You can always hire people that perform the functions you need to add to your special skills.

  2. If you really want to work with a partner, do a lot of research on the person before you go into a legal partnership. Know who you are dealing with. Interview them. Interview people that have worked with them.

  3. If you can own a majority stake instead of 50-50, do that.
  4. If you enter into a relationship and know that it has gone bad, deal with it quickly. Don't drag these things on. Your business and your mental health (maybe even physical health) will suffer.
  5. Get a good lawyer. This is not the time to penny pinch.
  6. Work from a place of forward thinking. Rehashing the past or having an internal debate about who did what, or who is right and who is wrong, is a waste of your time and energy. You can't turn back the clock. You can learn from the past if you let the anger go.

  7. Splitting with a business partner is not always just business. It can get personal. Be easy on yourself. You'll need time to recover from the process in one way or another.

  8. Don't rush into any new partnerships or make rash decisions. It's not the time to jump into anything too quickly.

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Comments 57 comments

keith o brien 8 years ago

Thanks good advice here.Just ended a business partnership and feel very releived.Went into it blind to be honest.Going to sit back and have a nice cold beer....no more 50/50 crap.


RochelleRochelle 8 years ago Author

Way to go Keith! Things wil just keep getting better. Enjoy the beer and the freedom!


Mike 7 years ago

I feel like I`m splitting up with a girl friend....My partner is irrational I offered him great deal to him buy out he said no it was not fair.....I then reversed the offer with him buying me out for the same price.....he was offended saying he was being ripped off......I can`T WIN any suggestions


RochelleRochelle 7 years ago

Get a lawyer if you don't have one already. Sadly, you may need to close down the business or at least make it clear that you are ready to do so. He may realize that getting some money will be better than getting no money. Of course, I don't know your situation and your business reality. I could not have done it without a lawyer who was very sympathetic and a great listener.


WD  6 years ago

Thanks for the article, Rochelle, it is amazing how it helps to see things from a different angle!. I have always been flying solo and think will get back on track.

It is always a fond of inspiration to find people like you!

All the best

WD


Mike 6 years ago

I just wanted to vent my situation,any advice will really help...I put all the money in to start this business.my partner/friend has payed me back since we have been succesful in our venture..it has been two years now and her son just started working with us. MY son has worked with us fo over a year and makes the same amount of money since he started, my partner has been paying her son more because she is in charge of the finance part of the business. I feel stupid for not looking sooner but I felt I COULD TRUST her she is my friend of 10 years. now I am so stressed out about this. she said she was reimbursing him for something, I feel i should know what is going on with my money ..when i do confront her she gets into a defense mode and accuse me of doing things and hiding things from her..I need to dissolve this partnership but not sure where to begin.. the contract has both our names on it ..but her integrity is an issue to me..isn't this a breach of that contract? in my eyes it is..any advice anybody can give me would be appreciated..MD


Anonymous 6 years ago

My husband was also my business partner for 15 years. Don't EVER do that! In our case, he was allergic to detail, so I ended up with the administrative "cleanup" so to speak while he was on the phone talking to clients, traveling and being the "big cheese." Next came employees who despite the fact that I was working my butt off - and often working at home late at night, resented me as "the wife." They had this notion that I sort of hung out at the office until the kids got out of school and they made things very difficult. But because they were young and male, my husband wanted them to look up to him, so he tended to identify with them. I think that this type thing happens to a lot of wives who end up in anything "Mom and Pop." I finally sold some of my shares to a key employee and handed my husband the rest of the company just to get out. Of course with the economy being in a slump when that happened, all of my proceeds went to our household and so I personally didn't see a dime. Add to that it's hard to get a job do to the present market, my age, and the fact that thanks to the way my husband insisted we run things - which kept me snowed under with clerical work - I never developed my career skills properly. If we hadn't had the kids, I'd have left him during the worst of this.


Anonmous 6 years ago

my friend is in a bad partnership and needs to get out other partner has been offered money but wont take it he says he is not a bad person but has so many problems in work has lost just about all his family and friends. his friends arent his friends they call him all day during work hours and ask for money he makes good money and never has any he doesn't put any effort into his work or partnership my friend has threatened to leave and just start another business what can i do to help this friend


Ali 6 years ago

Just finalizing the sale of our business. My partner has no idea that my main motivation for getting out is that I just can't fathom working with her another day. We have such different ways of viewing situations, handling clients, communicating etc etc, I feel her presence at the company is seriously detrimental. I'm just thanking my lucky stars that I have a way out. Honestly, you have no idea what it will be like to work with a partner, even if you're friends. DO IT ALONE!!!


Mike 6 years ago

I have started a business with a friend some time ago, we were stragling at the begining but we are getting there now. My friend!Patner wants out but he is not willing to take money and go. he is asking me to close down the company.

If i don't want to close down business and he wants to close down, what is the legal standing?

NOTE. We don't have any agreement..yeah i know dump!


Good Spot Bad Spot 6 years ago

I currently am in a partnership with Napoleon and a blind investor. Investor does not ask enough questions but is prepared to drop a lot of money into the company. I want out due to the bad business tactics and blatant lies by Napoleon 33% has changed to 20% over the last two months.. There is no paperwork drawn but several documents referring to me as partner. I have spoken to an attorney and attempting to sell my equity and future patent royalties to the partners just to get out of the company. Can I just leave and go operate the same type business or can they attempt to sue me for anything if I do?? Thanks, great hub here Rochelle


Mike 5 years ago

If your putting all the money in for a start up business and your "partner" is emailing all the contacts

how much should he be entitled to ?


APRIL 5 years ago

I helped my husband start up a business (I as VP) over 13 years ago and we have done well. However, I quit a couple of months ago because of all the crap. I threatened to quit before if things did not change---My husband was wishy-washy changing things daily, letting employees run over him and always saying I was a ball buster. When some new employees were hired and our assistant was basically run off after 5 years of employment I was so angry at the treatment of her, that was the last straw. I feel that I lost my authority and morale a long time ago. When I quit, everyone says it was the best thing to do to save my marriage. However, quitting when you didn't really want to quit sucks! Also, you learn who is loyal and who is not in the aftermath. Through it all, I believe that certain men feel threatened by women.


jenny  5 years ago

I am in partnership with an unreasonable and verbally abusive man, who not onlly brings absolutely nothing to the table in terms of ideas and overall input, but he also had the audacity to complain about things which are perfectly fine and create problems. We (I) started this business in june this year and we've already been voted top of what we do (it's a hostel)by various websites. Still, i can't bear him- his abuse, his comments, the fact that thanks to my capabilities he's making money off my ideas....so i asked to be bought out- just cut my losses and run......run, run, run and do it all again on my own. PEOPLE, GO SOLO- PARTNERSHIPS ARE VAGUE AND EMOTIONALLY EXHAUSTING.

But, must admit that i'm very excited about the prospect of opening up my own hostel, which will be even better than my last one. And, god knows that he'll his down the drain. Pity, as it is a really nice hostel.


usmcsgt profile image

usmcsgt 5 years ago

I offered to buy out my 50-50 partner who has become impossible to work with and the staff is complaining about him. He said he is not ready to be bought out. Now what do I do? How can I get him out?


monica 5 years ago

Any ideas on getting rid of the ex wife/business partner?


me 5 years ago

Thanks to all that have posted on this website, it has been an eye opener. im in a partnership right now and i don't like any thing about it. All that it has done is tear my family apart . I don't know how to end it and i don't want this bussieness to come to a halt. i think that it is a great bussieness its just not me. I'm not looking for anything but to get out of it just want out how can i do this with out crashing the biss., or having to take something. im at a lose in my life and don't know what to do. This has been an emotional, physical, and down right stressful. I just need a little bit of assitance in getting out of this. i want to start MY OWN but a partnership will never be a chocie ever again any suggestions would be great . Once again thank you to all that have wrote on this page it really gives me insight to how often this happends and not to sound rude but im sure some feel the same way, and that is dumb. Atleast i do.


Guest 5 years ago

1) Never start a business with a family member or hire a family member

2) If you find yourself doing ALL the work in a partnership, disuss it openly or dissolve it immediately. Either wise you will SUFFER. Suffering is spending energy on things that are 1000% beyond our CONTROL

3) Never start a business with a friend. Eventually emotions will over run logic and cloud our left brain, or decision quadrant.

4) Hire a lawyer. Pre-paid legal is best and cheap.

Right now I am dealing with, shall I say, a friend whom I started a business with. One of our businesses I spent close to $4,000 on an event and got nothing back but complaining and regret.

You would think I would have learned my lesson, but I did not. So now we are doing a bigger deal and there is even more money at stake. Unfortunately I am doing all of the work, the calls, the appointments, the showings, the contracts, everything. My partner just sits around playing xbox and trying to get his girlfriend, who is a complete cuck, I mean straight outta the G building.

So the lesson I am learning is expensive, stressful and could have been avoided if I would have dissolved my LLC after my first 4 gees.


DOCTOR 5 years ago

I was given 10% of a company 14 years ago. I had started working for the company as a Machinist with 5 other employees and the owner decided he was going to "give" 2 of us 10% each. I have paid taxes over the years on dividends and then we "re-invest" the dividends back into the company to help it grow (we did not have the cash to disberse). I receive a K-1 every year. The company now has sales of approximitly 8.5 million with 72 employees. I want to leave to help my son with his business (another machine shop) and would like some advise on how to exit. I do not have a non-compete agreement nor do we have an owners agreement (which I have insisted we do from the start). Can you help?


kristina 5 years ago

my brother got into a business with a parner less than a month in the partner barely showed up didn't put hours of work into the business or money at that fact. my brother spent over 60 thousand dollars for a company that he could have just did himself. its an early business that sees a bump in the beginning is there an easy way to get rid of that bump and continue with smooth driving


Dee 5 years ago

Jenny with the Hostel posting 4 months ago - could, would you contact me - I would like to know if you can help on a project. drusle@aol.com


mish 5 years ago

my father has not been with his patner for apox 4 years and still wants out of the buisness. Its like only the buisness name exists because no one is working under it, but his partner will not sign him out and we just don't know what to do. Our soliciter and the partners soliciter are not communtcating as they don't get along and we keep getting the run around. Its like a mouse on a wheel and has been going on for to long. Please if any one can help, what can we do to make him sign us off? Thank you....


CHAR 5 years ago

Advise please- my husband owns 10% of a company for the past three years, they are stilling pawying the business off to the ex oweners wife and kids, he works long hours and is going to lose his family soon, how can he get out of this deal, he says if he leaves they can sue for his share of the business, i have tryed to look at the contract and do not see anything like that, is there any one that can help


ricki 4 years ago

Hi I'm in a partnership with two other people. We are all equal partners. I feel its time for me to leave. We are financially successful. One problem is we have no aggrement as far a s dissolving our company. I'm sure my two partners will continue. What's steps do I take to determin the value of all of our assets equipment etc.


Miriam Wallace 4 years ago

Help!

My boyfriend went into a bar with his friend of 10 years. My boyfriend put in $55000 and his friend put in $10000, my boyfriend wanted to be the silent partner and was happy for his friend to run the bar as long as his accountant oversaw it all and the friend was to keep all the books up to date. It has been 3 years now and my boyfriend hasn't seen a cent. The friend pays himself a wage and has now opened up an art gallery on the same street and keeps saying that the bar is not making any money although it is busy and they have bands and a great menu. The friend has been stalling on the books as well but from the books he has handed in they all say the bar is not making money. We are now waiting on the accountant to finish the books for the end of financial year and my boyfriend has told the friend he wants to get out but the friend says "he has not money" He lives upstairs from the bar and runs it and pays the staff cash in hand. It is causing so much stress in my relationship I just need to know what to do?

HELP!


l1ll1lee 4 years ago

hi i have taken some money from my business and now my partner wonts me out, he has gave me two options to work away with just my tax and n.i bill or shut the business down and split the debt athougth the company is not in debt, can any one give me a little help with this many thanks


Carol 4 years ago

I'm in a partnership, I hold 50% and have 2 partners (a married couple) who have 25% each, I do all the work, they 'take care' of the finances, we've been in business for 2 1/2 years and I've been treated terribly, I have NEVER seen the accounts after repeated requests and even when a solicitor requested them they've said no, this is illegal, but without the money to take her to court I'm stuck. I am paid lees than minimum wage and living on the breadline, I can't access housing benefit, free prescriptons and the like as they all require proof of income which they won't give me, I can't walk away because as a 50% shareholder in a business I won't get benefits, they've underpaid one of my staff by thousands and there's nothing I can do, so depressing, and I can't get any free help as it's business related ,this can't go on!


slower 4 years ago

I have been working with my old man 38 yrs now , when we started work it was in a back yard .over the years we have grown .We now owen a building on the main street . problems started years ago. we never wrote a contract over years but i have put all the i have made back into the place. he wrote everything down but over the years seems to have lost the ledger.. being he was dad i never worried about it.now a days i am 50yrs old ,had a heart attack and want my money!since i now longer work his buiness has gone down .. he has always worked the office and i have always worked the shop area.. hell for the last 10yrs i worked for nothing 200$ a week my son has always asked way don't you get married or have a girl friend its been so bad all i can tell him is i can`t afford one.I could go on &on but i will spare you all..what percentage do you think then split should be I need some help " SLOWER "


Anj 4 years ago

I need advice. 12 months ago, I had been laid off and a man I know was also laid off. He thought it would be a good idea to start a business, I supported his thought because he seemed like he would do good. Big mistake. I found out he was an alcoholic, and he became verbally and then physically abusive towards me. During one of our meetings with an educator (we were interviewing teachers) he broke out a bottle of beer and proceeded to drink from in in front of her. Anyhow, long story short, he says that he blew through $100,000.00. I know that he hasn't, we started off with little money, but I knew that he drank a lot and had a lady friend that he was paying her rent and bills. I finally started my own business and let him know I was going to work elsewhere, now he mentioned something along the lines that he is expecting his money or investment to be paid back. Can you believe that?

What should I do? We never had a contract. I believe that it was his choice. I always said I would help him, he would call me the co-owner or business partner, and I would always say that he was my boss. Please advise.


katy 4 years ago

message to carol : how is it going now im in the same position more or less but with my ex partner


In a bind 4 years ago

HELP! I am in a partnership with someone who doesn't do any of the work. He is always "sick", the problem is the company borrowed money from his father-in-law to get it going and it will take a long time to pay him back, I have been trying to stick with it because I feel I need to make sure the guy gets paid back, but I am tired of doing all the work and my partner doing nothing! Any suggestions??


BizVT34 profile image

BizVT34 4 years ago from USA

Pick your business partners twice as carefully as you pick a spouse. A spouse can only take half of what you have.

http://hubpages.com/business/Ideas-for-business-pa...

To In a Bind... does the father in law want to get paid back badly enough to help you ouster the partner? Might be worth the call, if you bail it sounds like the father-in-law has himself a write-off. If the biz is viable I'd work more on getting rid of partner than getting rid of the loan.


galatai 4 years ago

Hi I have a business partner who walked away from the business a few years ago and left me with the loan and all the bills .is it true they are still entitled to half of everything when I deside to sell up


BizVT34 profile image

BizVT34 4 years ago from USA

galatai- the answer you don't want to hear is...it depends. You should definitely spend a few bucks now with a good biz attorney. It could save you a lot later on.


Bar owner 4 years ago

Me and my brother own half of a bar/restaurant and two other people own 25% percent each. We've been in business for five years now and the other two have taken out a lot of money that they shouldn't have. One owner took 62,000 and the other owner took $37,000. Me and my brother have taken out under $5,000 each for a total of about $9500. We have had numerous talks with then regarding taking money out of the company that has nothing to do with the company. The agree to stop taking money but as soon as the meeting is over they spend more money that same week. We owe money to the IRS and are always late on rent because of this. We never have money to pay our bills on time and keep getting fined for late payments which add up. What are our options?


BizVT34 profile image

BizVT34 4 years ago from USA

There are a number of questions that need to be answered before you can know what your options are. Was there any paperwork signed to describe the partnership? operating agreements? Your next stop needs to be with an attorney. Your tax issues could bite you way beyond what cash your partners are taking.


Deli Owner 4 years ago

Hi, I need advise. I went into a 50/50 partnership, im a conservative buyer the other partner not, so I have been saving the business money and the partner not, it was discussed that both of us will draw salary from end of feb, not happening, then I decided that my partner should maybe buy me out, but i don't know how it works, ive read on internet that you can claim back whatever you put into the business, goodwill and at least six months salary seeing that I have to be able to live while looking for a new job. What do I do????


Onesimus Malatji 4 years ago

Hi, I got in partnership with my brother the business went well but i was doing somuch for the company i worked hard and i wake up early for it and he was just sleeping and eating. It brings a lot of stress sometimes and i just say is my brother he will see his mistakes. This became serious when we open a branch and he was suppose to be responsible for it we spend more money on it then he just quit i was so stressed and he says computer are not his things then our business just ended. I happen to be happy cause i am used to do things on my own.The Business is fine it is running now the problem is we don't speak to each other and stressing my mom and my sister How to deal with is very painful. I do care about him just i don't want to do business with him and i want him to be my brother is very hard. Is like i don't have a brother and my family they don't know.I regret being a partner with my brother


Bee 4 years ago

Hi

Help! I started a business and I am slightly higher in the majority in that I put more into the business up front. 11 months in my business partner has taken seriously I'll and left but is insisting on sending her son into take her place and work free of charge so she still gets her full wage/profit! Can she do this? Her son is very angry and is impossible to work with and keeps throwing a strop infront of clients! I have warned him that I will have home leave bit he refuses! My business partner has also stated that in the event of her not returning to work her share will become her sons! Can she do this? Where do I stand as we have no contract (yep I know) and I want to buy them out! Surely in her absence my word is final in the work place! Help please ASAP!


leah 4 years ago

hi i just jumped the gun with 2 women and we got a loan for business.. i feel like we r working towards one of the other womens dreams and everything i say is tossed out, i know i was in lust per say about the whole thing but now i don't want to be in business with them i am more qualified alone and a mom of a 2 year old we haven't opened yet but i don't know how to get out i haven't put any money into it just signed my name on the loan!! please if someone can give me some advice on how to get out b4 its too late i would appreciate it!!


nikic123 4 years ago

Hi,

Can someone give me advice i went in to partnership just over two years ago. 50-50. We sell new and used commercials. I put my life savings in. My business partner has been taking over all accounts and moneys going in and out and I know he has been taking money out over and above what we agreed each month. With the banks now stopping overdrafts for stocking with all of this type of business they want us to pay back the overdraft as a loan. My business partner said we can not afford two wages and a loan to pay off and has asked me to leave with no payout? I am not well as I am waiting for tests to come back for cancer. This situation is making very depressed as I will have nothing to live on or even leave my family If things get worse with my health. Please help me as I need no stress at this time.

Regards

Nikki


fawaz 4 years ago

we are company looking for someone who wanna be partner in our company,to open branch in any country,we are company of designer house and director and selling stuffs for house and designer.

for more info please email me falasca82@gmail.com

thank


VCR 4 years ago

We went into business with my in-laws, we had a new baby & needed to upgrade our home & income & they had the solution (?!)....fast forward nearly three years & they have simply run off & left us here with a rapidly failing business & mounting debts. Since they left we have discovered many discrepancies within the financials & hidden facts, paperwork & things like they bought their car in the company name without our knowledge or consent. They are now threatening bankruptcy unless we pay their outstanding monthly debts (credit cards etc) but refuse to return & help us find an out. Their bankruptcy would cost us the business & our apartment as it is securing the business loan.....what are our legal rights on this? We are trying to sell & are resigned to carrying the leftover debt but somehow it feels that we surely have some rights here?!


Anomonyous 4 years ago

Hi two friends and I started a small business. Each paid an equal share for stock One of the friends has been unreasonable and taking stock at cost price instead of purchase price. We are not turning over a profit yet, their attitude is also well it's my money I can do what I like. The other friend and I are on the same wave length and want to continue on together. However we feel we need to ask this person to leave before it gets worse. The person however is showing no signs of going anywhere and carries a lot of weight in a network/group and we believe they will make it unbearable and do anything to stop us succeeding. There have been no contracts signed, although I own the domain name (which I originally came up with) they have the Facebook page. Unsure how to deal with this.


tal 4 years ago

I am in business with my soon to be exhusband. I do all the work and I mean all the work. He doesn't come in anymore and my stress level is so high that I can't manage and I am getting sick. I want to dump the company and walk away but he won't sign the papers. I am so screwed.


anom 4 years ago

I am co owner of a business and have been told to leave cause partner wants it i am only in my early 20 and they are double my age im scared cause i always have to face 2 of them never jst my partner . I can not leave the business have worked so hard on setting it up i earn the money with my staff i feel im been attacked they have agreed to sell there half giving dead lines to pay they have already took all the stuff away from shop leaving me with noting and having to and put it back i jst whish i knew wot i was getting in to i have some one who wants to bye them out but they are putting pressure on me to scare them bye saying if money is not there bye 3 days will take everything out of shop u think u no some one but it jst shows that u dnt no whos stabbing u in the back any advise


BizVT34 profile image

BizVT34 4 years ago from USA

Good stuff- You might want to also look at the Hub "The 2% Solution to Business Partnerships" http://hubpages.com/business/Disputes-among-Busine...


S.pider 4 years ago

My stress level has increased over the last month, in the beginning of our partnership, this person was a real good talker, and as soon as we started working he turned into an abusive power hungry monster. My stress is so bad right now I am kicking myself for trusting someone with a concept that is so damn important to me. He is sloppy and I think to my benefit, no agreements between us were drafted. I have been advised to see a lawyer... I am by no means in a financial situation to hire a lawyer, but at this point I need to. I feel like he pulled the wool over my eyes, but do people believe that what goes around comes around?


gopinath 3 years ago

we are 6 partner business is running in loss so 4 partner wants to close the business and 2 dosnt want to close the business and in the 2 one is selling his share to other third party it is possible


anon 2 years ago

I started a business in 2010 my work colleague joined me in 2011 we havnt signed any contract yet but are soon, I want to know if im entitled to the name of the business as I was the one who thought of it??


MRS CHETTY 2 years ago

Hi

My husband went into partnership with daughter/son in-law. The reason the business start my husband worked for a company and retired loved driving. part of his pension money paid of the house, car and estate, balance went for the vehicle .he drove for two years plus ,which brought in the money and the son in-law in trust was given the power of attorney and he also put the vehicle in his name ,because of tax proposes .Now my husband just want to come out of the CC/revoke the power of attorney. He does not have the money to fight this, please if someone can help, will be highly appreciated

Thanks


mark 2 years ago

What do I do if my partner walked away from the bussiness and left me with all the debt and mortgage only to turn up 5 years later looking for half the bussiness can he do this


nick 2 years ago

If me an my wife own about 80% of the business an our partner owns 20 is there a way to her rid of him if he slanders me an makes a hostile working with out paying him off with a buy out?


steve 17 months ago

Im getting divorced and own a business which my wife says she wants half, its a new business and i haven't registered with comoany house yet, how do i stop her taking half? Register it in soneone elses name? Any advice appreciated.


tickled 17 months ago

I'm laughing at the person soliciting a business partner in this depressing thread of terrible partner experiences! Doh.


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Romero 2 months ago

My business partner owes me $20,000.00. I own 51% of the business. We own a tow truck company. Can I just take a tow truck.

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