It is common for business leaders to require a loan as one point or another. There are many reasons a businessperson may seek a loan, even if the enterprise is successful; the individual may want to acquire a competitor, invest in equipment or marketing, or simply cover the bills during a slow period. Whatever the reason, there are many considerations to be had when deciding to get a loan, including some legal aspects when it comes to loan terms and contracts. Here are some things Georgia business owners may wish to consider before signing the dotted line on a business loan.
One of the first things worth considering is whether a loan is truly the best option. Grants, personal investments, or bringing in a business partner could also be considerations depending on the circumstances. If exploring business partnerships or a capital infusion from one or more owners, a robust contract drafted with the support of an attorney is critical.
Another consideration is the type of loan one takes out. Business loans and personal loans may both be an option, but it is important to understand how each might impact an individual or business in terms of liability. A personal loan can come with positives, such as flexible funding or lower interest rates, though it will not protect an individual’s personal assets. A personal guarantee, collateral, or co-signers may also impact the terms of an agreement, however this depends on the risk one is willing to take.
When entering into any contract related to one’s business, be it with an institution or an individual, it is a good idea to seek advice from a Georgia lawyer. In the case of business loans, there are often a myriad of options that each have their own combination of liabilities and risks. Understanding the “fine print” on these agreements and being clear about how the signatory and co-signatory may be impacted is important to secure the health and future of the business and protect those involved.