You are the Business Development Officer at one of the branches of ACE Bank which focuses on retail banking. You have a large number of small businesses as customers. One of the existing customers is a partnership that has operated in the building industry for almost 15 years. The business had previous loans at your bank that have all been repaid well. Currently, the partnership applies for a new loan of $235,000 to purchase equipment that will be required to replace their old equipment. The financial position and financial performance of the business are good according to the financial statements of the partnership and internal bank records of ACE Bank. The bank is informed that the partnership now consists of two active partners and one silent partner.

a. What information do you require to verify the silent partner position? (2 marks)

b. Would you recommend/require any guarantees for the transaction? Please substantiate your answer. (3 marks)

c. Are there guarantees of any of the partners that will not necessarily be beneficial to the bank? Please substantiate your answer. (3 marks)