Does going delinquent/defaulting on a business loan affect my personal credit score?

[MetroStyles]

Assuming I have an LLP or LLC set up, and my business fails, and I cannot repay the bank, and they liquidate my assets/etc. to try to get their money back.

After all this is done, does my personal credit score suffer? Or is it protected through the LLP or LLC? I doubt it is, but I want to know what risks I am exposing myself to before starting a business.

Thanks.

 

[SkinnyGoomba]

Are you planning to collateralize the debt with your house (if you own one) or other property? If i'm not mistaken you live in an apartment, but who knows you may have some sort of investment property.

Out of curiosity what are you thinking about developing? and what would you need a loan for?

I think its going to be extremely tough to get a loan for a start up right now, and i honestly would not suggest risking any of your property on a new business.

 

[MetroStyles]

Originally Posted by SkinnyGoomba

Are you planning to collateralize the debt with your house (if you own one) or other property?

Out of curiosity what are you thinking about developing? and what would you need a loan for?

I am starting my own karaoke bar. I have quite a few ideas on how to beat the competition. Furthermore, I know of a lot of great spots I can rent at.

Problem is, I only have about 30-40k of my own money I can use on this venture right now. So I need lending, either through a lending institution or friends/family. I prefer to keep friends out of my business though. It can only end badly.

 

[cchen]

Yes, it will affect your personal credit score.

Good luck trying to get a loan for a new business. Banks are giving loans right now.

 

[Flambeur]

99% of people who start a business sign personal guarantees - which pretty much guarantee that you get fucked when your business goes bust.

You can sometimes avoid personal guarantees, but it's usually very very hard

 

[feynmix]

MetroStyles, just out of curiosity, how old are you?

 

[SkinnyGoomba]

Originally Posted by MetroStyles

I am starting my own karaoke bar. I have quite a few ideas on how to beat the competition. Furthermore, I know of a lot of great spots I can rent at.

Problem is, I only have about 30-40k of my own money I can use on this venture right now. So I need lending, either through a lending institution or friends/family. I prefer to keep friends out of my business though. It can only end badly.

Cool,

Doubt that banks would be interested, nothing says you cant prospect private money if you have a solid business plan, and a solid plan for paying off the investors.

I would also include plans for buying property at a cheap price.

I wouldnt prospect your friends or family, but I'd plan to pitch it to other high net worth people who might be looking for a solid investment.

I have a friend who assists people interested in ventures like this, he does the written material and will help you pitch the idea to investors and also assists in writing a business plan. Good guy, many times he works out a deal where he only gets paid if you are successful, if you're interested i'll PM you his contact info.

Just some thoughs.