Businesses that have too much debt will find that their profits are directed at paying back loans and not building retained earnings in the business that can fund future growth. Consequently, banks and government loan programs look more favorably at loan requests that do not add too much debt to the business. All loan programs require that the business owner put their own money in the business. This owner equity injection shows that the owner believes in the business enough to risk their own money. Yes No Business and personal assets can be considered collateral, or a way to repay the loan if the business defaults on a loan.
Most collateral is valued at an amount less than face value based on a variety of factors.
For more information see Key Points to Consider - Collateral . No Most business owners are asked for a personal guarantee in order to obtain their first business loans. As businesses expand, they need more sophisticated management as it relates to strategic planning. When you apply for a loan, your banker will consider the qualifications of your management team and advisors in order to determine if they are capable of leading your business to the next level of growth. If there are sectors of your business that you need assistance with, we strongly recommend that you attend entrepreneurial training classes, visit a women's business assistance center or Small Business Development Center in your area, or contact your regional SBA office for information on local resources.