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    1 Reply Latest reply on Apr 14, 2011 12:07 PM by WSBryanJaneczko

    Are you protected in the loan if your business does not succeed?

    PC PHIXER Newbie
      hi,
      i was just wondering if i had lost everything business store, eveything am I protected?
      or do you still owe the money that i was approved for in the loan?
      and will it ruin my credit for ever like having your own home.
      I do know for a fact that If you lose your house because you cant make the payments that it will be very very herd to ever buy another one.
      And its on your credit report for life.

      Is owning your own business save you.?
        • Are you protected in the loan if your business does not succeed?
          WSBryanJaneczko Wayfarer

          Hi PC Phixer,

           

          Unfortunately you're not "protected". If you sign up for a business loan, you're personally responsbile for paying it back. If you can't pay it back then your assets and credit are on the line.

           

          Generally, in both of the case of a bank business loan and an SBA loan, you’re going to need to  personally guarantee the loan. With an SBA backed loan, however, the  government guarantees 90% of the loan amount. This is why banks are more  likely to lend to small businesses with an SBA backing. SBA loans have  their own set of rules & requirements and may be better as well for  the borrower. Right now the interest rate on an SBA backed loan is 6%.  General business loans may have a different interest rate.

           

          I suggest that you're looking to get a loan, you first make sure that you're in a good financial state (the bank probably will not loan to you otherwise, anyways). Also, make a plan B for when your business "tanks" and you'll need to pay back the loan in full. Think about what you can sacrifice if you don't have enough return to pay back the loan out of the profit of your business.

           

          I hope this helps..

           

          Best,

          Bryan Janeczko, Founder of Wicked Start