How to De-Risk the Personal Guarantee

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.

That's what we're currently offering. We're doing this fairly simply to introduce it to the market. We'll have one policy for each loan that, that is taken out.

And going back to the 50 number guys and how you've said you've wanted to introduce this to the market conservatively and then you're going to keep evaluating and see how the market responds. So that 50% number was the magic number that you guys arrived on, or the, I guess insurance carrier behind you who's going to be the actual underwriter of these policies, mandated that or you know, how did…

Or it's, you know, just kind of a nice round number. How did you arrive at that exact number? Because these other providers who are going to be coming out in the market have a different number than 50%.

Absolutely. The, the coverage that we look at is, is really going to be on a first of all kind of loan by loan deal and we're happy to chat with anyone on, on what they're looking at. So everything is independent. We have an independent analysis.

What we really wanted to think about is working backwards from the framework of what the SBA and the lenders want in place. Lenders performance really is dependent on if they're defaulting on a lot of loans, they can lose their preferred status with the sba. What we wanted to do at a.

Thousand foot level is do this in. A way that is compliant with a lot of different competing demands. Our number one priority is obviously serving.

The customer and really being there for the insured. But we also wanted to be something. That could be used as a tool.

For lenders and a lot of deals. And we didn't want anything to happen where the lenders felt like this policy could wipe out their lending book as well. And we arrived at that by speaking with a lot of different groups and making sure we were aligned there.

One thing that we've also found is if you want to have the sellers of your business stay on and actually help with that business. Under an SBA loan, those sellers also. Need to sign up for a personal guarantee.