If you default on a small business loan do you have to pay it back?
charlemagne8410 asked:
Also, if you have to declare bankruptcy on a small business loan will it affect your personal credit?
Also, if you have to declare bankruptcy on a small business loan will it affect your personal credit?
February 14, 2008
• Tags: Bankruptcy Loan, Loan Personal, Personal Credit, Small Business Loan • Posted in: Small Business
3 Responses to “If you default on a small business loan do you have to pay it back?”
You do not mention bankruptcy or incorporation status of the business. Those facts can totally change the answer if the business was a limited company or you went bankrupt.
The answer to your first question is yes, if you obtained this loan through the SBA and that is regardless of whether you declare bankruptcy. An SBA loan is much like a student loan as it is secured by the government and bankruptcy laws do not apply. Now, as to whether this affects your personal credit, this depends on whether the loan was originally secured based on your personal credit or separately as a business entity. If it was secured based on your personal credit, yes it will. Going back to your original question… you don’t have to do anything but live, die and deal with consequences of what you do while living. You can duck paying any debt back, but you have to change jobs and residences frequently, which in my humble opinion is not ethical, moral, or desirable.
Hi,
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