Using a professional loan to fund a partner’s buyout payment

Earlier this year the professional lending team at United Trust Bank were approached by a broker and asked to consider a loan for a successful firm of chartered accountants which was intending to buy out a retiring partner. The terms of the buyout agreement were such that they needed to pay the retiring partner in a lump sum. This would have resulted in extracting a large sum of cash from the business, and potentially some from their own pockets. It therefore made sense for them to spread the cost of this over a longer period.

United Trust Bank can offer loans of up to three years for just such a purpose, and we were able to provide an approval for the full amount and the term requested with the detailed information presented to us by our broker. Once we were happy that the business was performing well and that the terms of the exiting partner’s buyout agreement were reasonable, it was a straightforward process to release the funds to the client so that the partner could retire with his lump sum and the remaining partners weren’t left with a shortfall of working capital.

This case was brought to us by an experienced professional loans broker with whom we’ve built a strong relationship over the last two years. Once we’d been able to get comfortable around the financial performance of the company, as well as the terms of the buy-out; we were satisfied that a three year loan was a good solution for the customer and that it met our lending criteria.

When some brokers think of professional loans they tend to think of tax bills and PII premium funding. Whilst this does constitute a good proportion of our business, brokers are increasingly presenting proposals on behalf of professional firms looking to secure funding for more unusual purposes. United Trust Bank is keen to develop its professional loans business further by offering flexible funding to a variety of professional businesses, from accountants and solicitors to vets and dentists and for a wide range of uses.