An alternative financial company generally refers to credit unions. A credit union is non-profit organization that differs from a traditional financial institution (i.e. bank) in that the credit union’s owners are account holders in the credit union. A credit union’s primary goal is to improve its members’ financial stability by allowing them to borrow money at low interest rates. Once an individual deposits money into his or her account, the individual becomes part owner of the credit union and shares in its profits.
Like traditional financial institutions, alternative financial companies offer checking and savings accounts, credit cards, and loans. However, credit unions generally have a lower profitability than banks, which indicates that credit unions are more concerned with the well being of its members. Credit unions also enjoy federal and state tax exemptions provided to non-profit organizations, unlike traditional financial companies.
Membership to an alternative financial company is regulated by government standards. Membership is restricted to defined geographic locations, members of specific non-profit associations, employees of specific companies, or certain occupations. In most cases, once an individual becomes a member of credit union, he or she is considered a member for life. Membership is not revoked when the individual moves, changes jobs, or discontinues membership from an association. However, if an individual decides to cancel membership with the credit union, there is no guarantee that he or she will be able to regain membership into the alternative financial company.
Buying out your partner generally refers to business owners looking to purchase another partner’s shares of the same business. A partner may choose to leave a business if he or she is moving, retiring, or otherwise no longer be a part of the business and its profits. Before deciding whether or not to buy out a partner, a business owner must consider several factors.
The first thing to consider before buying out your partner is the value of the partner’s share of the business. Some partnerships have business agreement contracts that outline the duties and obligations of each partner. These agreements may also indicate a pre-determined value in the case of a buy out. Businesses that did not determine the selling price of a partner’s share can use an asset valuation (current market value minus current market debt) or rely on the business’s earnings to settle a price for the buy out.
Another factor to consider before buying out your partner is how to finance the buy out. Most lenders do not provide loans specifically for buy outs, but they do offer loans that can be used for any business purpose. For large loans, lenders usually require applicants to supply personal and business financial documents, a business plan, and credit reports. If a business has a poor financial history, it may be unable to obtain a large loan at a low interest rate.