OK, looks like this could be the deal breaker.
The advice NOT to be a personal guarantor makes perfect sense, but I can also see it from the landlords position.
At the moment it is looking as though he will say no to the deal without it.
We are basically talking about risking 9 months rent, we have a 18 month break clause (with 3 months notice) and the first 9 months are rent free.
We are confident we can make it work, so will probably have to take the chance.
Are there any other options?
Thanks
The whole point of operating as a limited liability company is to limit your personal liability. My signing up as a guarantor you are creating a personal liability.
Whilst it isn't necessarily a bad thing to stake a bit more of your money, you need to be 100% sure that you can afford it. There is a whole world of different between the failure of a business and personal bankruptcy, with the former you dust yourself down and start again, the latter can and probably will ruin your life.
I think that you are being far too soft, to be frank. It doesn't matter whether you are a cafe owner or a commodity trader, business is rough and tough and you come across as being far too diplomatic and resigned to having had your hand forced.
The sole reason why you are getting a nine month rent free period from your landlord is that there is currently more commercial property on the market than there are people willing and ready to take up the tenancies, he isn't giving you nine months free out of pure altruism - he (or she, or they) are giving you nine months because they would otherwise find it hard to find tenants at a time when - frankly - food outlets and sandwich shops are struggling.
If you can genuinely afford to cover this liability (as in, you have the cash or liquid assets to support the maximum possible debt should your business fail) then you can also genuinely afford to put the ball back in his court with an alternative proposition, of which there are a near infinite number of possibilities if one has a creative business brain.
As an example, you could provide your business account with 'loan from a director' equivalent to three months full rent, and then propose that to limit his risk you will voluntarily reduce the rent free period to six months.
Or alternatively, you could use this directors loan to pay three months rent up front, with your agreed nine month rent free period beginning in the fourth month and finishing after the twelfth.
If you don't have the money to loan your business money, then you don't have the money to personally underwrite this debt.
If you can't reach a suitable compromise, and one that you can afford, then the obvious other option is to simply reject the terms offered and hold out until an alternative property becomes available. I appreciate that you have probably done a great deal of research into the market, and that the property might have decent footfall, and that you have confidence in this property and your business plan, but ultimately at least one and probably several businesses have already tried and failed in that premise and if they hadn't then the landlord probably wouldn't be offering nine months rent free and he probably wouldn't be so concerned about the potential for your business to fail.
If you
have the money to underwrite your lease, and are genuinely willing to accept that there is real potential to lose that money, then do it if you wish. If you do not have that money, then use your head and not your heart.
You sounded pretty negative when you said this:
"but I can also see it from the landlords position. At the moment it is looking as though he will say no to the deal without it."
I can see several ways to put the ball straight back into his court and what you want him to be saying to himself or to friends is:
"I can see it from the tenants position and it is looking like they will say no unless I agree with this, I suppose their compromise is a fair one".
Just good old fashioned barter.
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