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If you don’t have that protection in place by dividing your business finances, you risk opening up your personal finances to seizure when that judgement goes against you. If you’re a serious entrepreneur—or even a casual one—there’s no reason to put your personal assets, credit score, and precious time at risk.
America’s small businesses face unprecedented challenges. Small businessbankruptcy filings increased 78% over the past year, driven by impending changes to bankruptcy law and ongoing uncertainty about the overall economic outlook. On the payments side, electronic payments definitely make bookkeeping easier.
This makes lending to small businesses much less risky for the lender since they know that the government will pay them back, even if the borrower can’t. You need to have good credit and strong business financials to apply, and in most cases, you have to sign a personal guarantee. Are SBA Loans Personally Guaranteed?
With that in mind, the lender will likely—if not, definitely—want to have the remainder of the SBA loan guaranteed by the business and, failing that, the personal assets of the business owner. They essentially offer you zero financial protection if your business isn’t as successful as planned.
Here we’ll discuss how the bank crisis may affect the future of entrepreneurs and what you can do to protect your business. These risks include credit risk, meaning loans may not be paid turning them into non-performing assets, and liquidity risk, which is when withdrawals from the bank are more than the bank’s available funds.
With that in mind, the lender will likely—if not, definitely—want to have the remainder of the SBA loan guaranteed by the business and, failing that, the personal assets of the business owner. They essentially offer you zero financial protection if your business isn’t as successful as planned.
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