How to De-Risk the Personal Guarantee

And one of the really simple, low hanging fruits is if you can acquire business with 7A that has real estate. And then with a lot of the new rules that I'm sure you've heard about as well. If you can, if you can attach that real estate collateral, it's going to essentially reduce your, your personal risk and your personal guarantee, which we then provide some coverage.

There's. But that's one thing that really does help mitigate things.

They have probably, well, it can vary some, maybe less than six figures, but many will have a couple hundred thousand dollars, maybe more in the deal. They will probably have years of their life and career invested in the business. They will have the reputational damage, the emotional and personal damage of having to, of having to dissolve a business and let go of everybody.

I mean, they'll. So, yeah, so there's a, there's a lot of, There's a lot of already of financial skin in the game and reputational and emotional skin in the game, even without the personal guarantee. So it's not as if the personal guarantee is the only thing keeping people motivated.

Certainly not. There's, you know, you have to have a real sense of self, a real passion to be willing to get into the space and take ownership of your journey. And what we think is an incredible thing, it's really kind of an American story of being willing to pull yourself up by your bootstraps to make something of yourself, to build wealth for yourself and your family.

And we're really encouraged to help people out in this space because it's such an incredible thing people can do, and we want people to be empowered to do that. And of course, there's, there's a lot of weight on your shoulders as a business owner, so why should that be even higher with the full weight of.

A personal guarantee and will just going. Back to kind of using it as a tool? One thing you think about, you buy your business and maybe you want to buy another one or you want to figure out a way to reduce the risk.

One of the one things you think about in year two, three, four, as. You're paying down that loan and you're running that business, is how can I reduce my risk of that personal guarantee? And a lot of folks, the first thing they do when they perform really well is they will actually refinance that SBA into a conventional loan that doesn't require personal guarantee.

But the rates on that conventional loan may not be as solid as that original sba.

And so we've spoken to a few folks that say, hey, this is also a really good decision point for me as I think about increasing my personal liability on my first business and then buying a second or third business, and again provides a tool for me to expand, potentially have a holdco, and also analyze whether refinancing into a conventional loan that doesn't have a PG may be different or have a…

So again, we're trying to be a tool as people build their family and net worth and think about do I want to acquire a franchise, a second one, a third one, what does that look like as a, as a total picture of my, my family and building that.