Loans versus Investments

This is a discussion on Loans versus Investments within the Business and Financial Law Questions forums, part of the Legal Questions & Answers Forum category; Can one entity [ LLC] loan money to another entity with a structured repayment based on the profitability of the other llc? Meaning the returns would be on a speculative ...

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  1. #1
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    Loans versus Investments

    Can one entity [ LLC] loan money to another entity with a structured repayment based on the profitability of the other llc? Meaning the returns would be on a speculative return? Is this a loan or investment and can we be an LLC or must we be a bank?


  2. #2
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    Sure, you could have a contract spelling that out. Is it logical to do so? No. Why you ask? Because small businesses, not publicly traded, are free to manipulate their books, falsely representing and improperly classifying assets etc.. Your ability to reclaim even the initial capital, is highly suspect unless the owner chooses to be honorable.

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    You can invest only that place which is doing business with the publicly trade policies. For small business you have to deal with the loans.


 

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