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Can someone buying a business accept liability for a loan to that business which the owner has previously personally guaranteed? |
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Answer
Only if the lender agrees to release the personal guarantee of the old owner.
If A loans money to B, and later B and C agree between themselves that C will be responsible for the loan, that does not change the contract between A and B. A can still enforce the terms of the note against B under those circumstances.
We are often asked why it is important to build a strong business image and credit. There are two answers to that question. The first and the most obvious answer is that it is important to build strong business credit in order to Secure Business Financing. However, not all businesses require external financing; often entrepreneurs will refer to family and friends for startup capital. This is where the second reason, Emergency Financing takes precedence.
If your business is experiencing strong growth such as a need to expand warehouse space, inventory, or work force, and the financing of such operation is beyond that which is available from friends and family, a strong business image and a strong business credit profile can aide in securing financing with lower rates and quicker approval times.
First answer by Killian. Last edit by Ibodner. Contributor trust: 33 [recommend contributor]. Question popularity: 41 [recommend question]
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