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