Business or personal loans
Far too many businesses fail to document loans they provide to other parties or when related parties lend the business money.
And even fewer bother to seek or provide security for the loans.
This needs to end. If your business borrows money from the bank they always document and secure the loan. If you’re lending money to your business why aren’t you doing the same?
If you or your family are beneficiaries of a trading trust, why aren’t you taking security over the trust assets?
If you or your business has lent money to other people or businesses why isn’t the loan documented and secured?
Consider this simple example:
- Grandfather John lends his granddaughter Sally $150,000 to start her business.
- Business goes well and after several years the business has grown and has amassed significant assets as well as a growing balance of creditors.
- An economic downturn has lead to cash flow issues, ultimately ending in the collapse of Sally’s business.
- At the time of collapse the business has assets of $200,000 but owes creditors $600,000 and John is still owed his $150,000.
- John is now lumped in with all other unsecured creditors and will only receive a return of 27 cents in the dollar – $40,000.
- If John had secured his loan over the business’ assets he would have recovered all of his $150,000 as a secured creditor.
Documenting and securing a loan is now a simple exercise costing hundreds of dollars, not the thousands it once did. Visit Credi.com to see how easy it can be.
If you’d like further information contact PPSAdvisory by clicking here.