Giving a loan for a business

I'm loaning $ to this guy for a business, it's a simple ebay business. (it's more or less a loan of a favor)

What I'm concerned about is there is anything I have to worry about w/ regards to liability? Like if he does something illegal can a suit be brought upon me.

I know I should ask a lawyer, and probably will, but just wondering ETs input.


Thanks

 

Does he have other sources of income? Because that's the only way you will get paid.

 

I'm not concerned about that.... its not a loan based upon I think it's a good idea. It's a favor

What I'm addressing is say the business does something where it finds itself in a lawsuit. Can the person who gave the loan (me) be liable?

 

Make sure you have a legal loan document showing it is a loan with a scheduled payment plan and not an investment. Make sure it is an 'arms-length' transaction where you have no part of the business as manager or as an investor which could be considered a partnership, etc...

 

Of course not. If so every gun bought on a credit card that is used in crime would make the credit card company liable. Think what you are asking.

 

as long as you are not in a partnership agreement, or your name isnt on the bank account attached to ebay, you should be fine.