Investing in boss's business

Hi,

I've been working as a security guard at a bar for the past month. I work for a security company that subcontracts to the bar. This company has only been recently established and my boss, who has a small stake in the bar, is still sorting himself out.

My boss said that he's a bit short on cash at the moment while he gets organized and he's made a proposal:

Lend him $10,000 and in 3 months I get $12,000 in return. Bank won't lend to him because there's no collateral. It will be done through his accountant. He's going to email me something soon and it will be some sort of signed agreement. I'm essentially freeing up $10k of the capital he has tied up in the bar.

I've known him for a few months now as we worked for the same security company before we started at the bar. From what I've seen of him and heard about him, he's a decent, honest and somewhat successful guy.

Anything I need to know before going ahead with this?

Thanks

 

There are lots of accountants out there giving legal advice and doing legal documents these days! Beware.

Who is the borrower? The boss or the company. If the company make sure you get a personal guarantee from the boss.

Assume you won't get the money back for a moment. You will have to sue the boss and/or company.

Do the company and boss have any assets? Are these assets valuable? Is there equity after debts secured these assets are taken into account?

 

Investing in boss's business - Aussie Stock Forums