And without really factoring that in to how you look at entrepreneurship, how you jump in, you miss a lot of, I think the soul behind it. And it's those stories that we kind of wanted to build this out is just providing a tool so that people can navigate those life decisions within the decision of jumping into entrepreneurship.
Acquiring Minds
How to De-Risk the Personal Guarantee
Excerpts · 257 segments · ~1:10:41 long
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We spoke to a group of four guys in Ohio and Michigan that are rolling up doggy daycares and adjacent businesses and one of them runs the business full time. The other three, I think, all work at hedge funds. They're all kind of splitting the SBA loans that they've taken out.
And the PG on each of their heads just continues to grow as they take on more SBA debt. And this is one of the groups that they thought about refinancing everything, but then they heard about this as an option.
And the cost of refinancing into a conventional loan with rates where they are now versus when they took out these loans, is so much higher than what they would have to pay to take out this insurance policy on loans that they take out moving forward.
And by the way, in a, in a case where there are multiple borrowers or multiple PGs, what does that look like?
Yeah, really good question. We, we insure one individual, but the partners, anyone that's tied to that loan. Essentially is, is getting some advantage if they have that policy.
So it can help if you've got two or three partners and maybe one has a lot of net worth and one doesn't, it can be a way to kind of MIT or distribute that risk in a way that evens out how much each one is on the line for. And so that's another way that again, as a tool to think about, as you've got a group of people, maybe someone says, well, wait a second.
Why am I putting my $2 million net worth on the line when my buddy is not putting anything on the line? That's not really fair. And so again, as a tool, this can come in to potentially spread that risk a little more evenly.
So the business pays for the PGI and the $2 million partner has his risk mitigated by 50% and the business pays for it. And so some. So the risk has been spread somewhat.
That could be one way to do it. Correct.
How else might you do it?
Oh, just as a tool, just as a way you think of partners. I think that's, that's the hard part. I don't, I don't know if there's a lot of opt.
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