Business Loan Question : If the Business fails, I need to protect my personal assets?

This may be a stupid question but I want to get a small Business Loan from the Government or the bank and use it efficently in a stable business. How can I protect my personal assets if the business fails.

I have above average marketing and sales skills so im sure it will be profitable but some things are beyond your control.

Business Loan Question : If the Business fails, I need to protect my personal assets?

There are two things to consider. First, look at organizing the business as a limited liability corporation. Second, recognize that it is the access to your personal assets that might be what sells the loan--if they don't have something of value to come after, they may not want to loan the money in the first place. Talk to a lawyer about how to make things clear. Ask about trusts that will protect personal assets (but remember item 2 above).

Business Loan Question : If the Business fails, I need to protect my personal assets?

Incorporate. Perhaps via a LLC (limited liability company/corporation).

Get the loan for the corporation, not you.

Business Loan Question : If the Business fails, I need to protect my personal assets?

If you do not want your assets taken, do not use them as leverage to get the loan. My first suggestion is to buy a business that is selling or going out of business. You can usually get thier assets for cheaper than book value, thus making a loan easy. If they are profitable, you will be able to use thier future cash flows as an asset for a loan. You will also want to put some of your own money down. This shows that you are serious, and keeps anyone from applying alien to your assets. Unless you are purchasing assets for well under the value, you will be required to put 10-30% down to get an SBA loan. If you contact a good business broker they will be able to fill you in, and show you some businesses for sale in your area.

Business Loan Question : If the Business fails, I need to protect my personal assets?

In all likelihood regardless of which bank you borrow from ( and SBA loans are made by banks also) they are going to require you to personally guarantee the loan, especially if this is your first business loan or the first loan you have with this bank. If this is required, you cannot legally protect assets from creditors and attempts to do so could be considered fraud.

If the bank asks for a personal guarantee try and negotiate it away. If they say you cannot have the loan without the PG, ask how soon and what must happen for it to be removed. Then get that in writing.

Good Luck.

Business Loan Question : If the Business fails, I need to protect my personal assets?

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