Comments on: What to Look for in a Business Partner http://legal.entrepreneur.com/2008/05/01/what-to-look-for-in-a-business-partner/ The small business mentor's guide to entrepreneurship and law Fri, 04 Jul 2008 04:42:58 +0000 http://wordpress.org/?v=2.1 By: Melanie http://legal.entrepreneur.com/2008/05/01/what-to-look-for-in-a-business-partner/#comment-1213 Melanie Sat, 10 May 2008 14:27:16 +0000 http://legal.entrepreneur.com/2008/05/01/what-to-look-for-in-a-business-partner/#comment-1213 I was wondering - if my new business financing involves private investors how important will the personal credit be of the principals? I was wondering - if my new business financing involves private investors how important will the personal credit be of the principals?

]]> By: Nina Kaufman http://legal.entrepreneur.com/2008/05/01/what-to-look-for-in-a-business-partner/#comment-1214 Nina Kaufman Sat, 10 May 2008 14:40:11 +0000 http://legal.entrepreneur.com/2008/05/01/what-to-look-for-in-a-business-partner/#comment-1214 Your personal credit can still be a factor with private investors. Private investors--especially those who are not family or friends (who might be a little more forgiving or willing to take a risk)--will want to have some sense of your track record so that they can gauge the likelihood of having their investment pay off. If you've been in and out of bankruptcy court and fraud or collection lawsuits like a revolving door, that certainly sends a message about how well you may manage their money. If your personal credit history has some hiccups, best thing is to disclose that yourself (if you hide it or misrepresent it, it could be grounds for fraud). Provide a reasonable explanation as to what the problem was and the safeguards you'll consider putting in place so that it doesn't happen again (if other than a one-time event). Your personal credit can still be a factor with private investors. Private investors–especially those who are not family or friends (who might be a little more forgiving or willing to take a risk)–will want to have some sense of your track record so that they can gauge the likelihood of having their investment pay off. If you’ve been in and out of bankruptcy court and fraud or collection lawsuits like a revolving door, that certainly sends a message about how well you may manage their money.

If your personal credit history has some hiccups, best thing is to disclose that yourself (if you hide it or misrepresent it, it could be grounds for fraud). Provide a reasonable explanation as to what the problem was and the safeguards you’ll consider putting in place so that it doesn’t happen again (if other than a one-time event).

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