The Law and Your Business

Securing Capital

What are some legal considerations in loans from financial institutions?

The bank will demand that you put up collateral to secure the loan—something tangible the bank can take to recover its losses in case you can't pay the debt. Most start-up businesses don't have a building or fleet of trucks that can be pledged as collateral, nor do they have a big stock of inventory or accounts receivable that could be pledged. As a result, banks will generally require personal guaranties and collateral from the owners of the business. This means that you will have to back up the loan with losing your home or other valuable property to get funding—and that you could lose this property if you fail and default on the loan.

>>What are some ways of securing capital?
>>How about using my home equity to get funds?
>>What are the legal considerations in getting loans from family and friends?
>>What is a promissory note?
>>What are some legal considerations in loans from financial institutions?
>>What about my spouse’s assets?
>>Are government loans available?
>>What about help for women and minorities?
>>What are the legal considerations in getting contributions from others?
>>Legally, what’s the difference between active investors and passive investors?
>>What if I want to have “passive" co-owners?


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State/Local Laws That Affect New Businesses | Home-based Businesses

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