| If you are like many small businesses, you | | | | loan application process. Likely before you |
| eventually hit a financial roadblock. It may | | | | were approved, the bank forced you to give a |
| be because of the economy or because your | | | | personal guarantee for the principal amount. |
| customer's needs have changed. But while you | | | | This meant that you, the small business |
| are struggling to survive, you are not only | | | | owner, had to put up your house, retirement |
| dealing with cash flow problems but also | | | | fund or other personal asset to secure the |
| facing SBA loan default. | | | | SBA financing. |
| | | | |
| If this is your case, you are not alone. | | | | When facing SBA loan default, the bank has |
| Hundreds of thousands of small businesses all | | | | every right to, and will, call in your |
| over the country apply for and get new SBA | | | | personal guarantee. You will lose your house |
| financing every year. And the majority of | | | | and your personal assets to pay back the |
| these will go out of business during their | | | | bank. Once the personal guarantee is paid, |
| first five years. Facing SBA loan default is | | | | and if you still owe money, only then does |
| common. | | | | the SBA backing kick in. That's it. End of |
| | | | story. The bank still gets all its money and |
| So what should you do about it? Should you | | | | you lose if you default on the loan. |
| just default and not pay back your loan? | | | | |
| After all, the SBA or Small Business | | | | So what do you do when your business is |
| Administration financially backs up all SBA | | | | financially strapped? The most important |
| loans through the bank. The bank stands to | | | | point here is to prevent SBA loan default to |
| lose nothing, so why should they pursue you? | | | | begin with. If your business is struggling, |
| | | | it's time to turn it around. A business |
| SBA Loan Default And Personal Guarantees | | | | turnaround can get your company back on track |
| | | | financially. If you create and follow through |
| Unfortunately your situation is not so | | | | on a business turnaround plan, you can make |
| simple. Even though the SBA does back all of | | | | your business profitable again. |
| these loans, this is never enough of an | | | | |
| insurance policy for the bank. Usually they | | | | Once you are profitable pay off any SBA loans |
| require every business owner to put up | | | | based on personal guarantees. This way you |
| additional collateral to secure the loan. | | | | will never find yourself facing SBA loan |
| | | | default again. |
| Try to recall what happened during your SBA | | | | |