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grantlawpc, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31
Experience:  United States Bankruptcy Code: Chapter 11 Business Attorney; Restructuring and Recoveries
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This question is about a buisness. A buyer bought a small buisness

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This question is about a buisness. A buyer bought a small buisness using SBA loan.
Also the SBA loan made the buyer unconditionally guarantee the loan with personal asset.
Unfortunately, the buyer has to shutdown the business due to cash flow issue.
I guess the buyer has to pay for the SBA loan from his personal assets.

What about other business bills related to the buisness?

If the business has some unpaid bills (business related utility, phone, ad etc), and if the business is showdown, will the business owner be personally responsible for those unpaid business bills? Shall the buyer is responsible (personally) for those unpaid bills? If the utility company goes after the business and go collection, whom they will go after?
Any relation between the SBA loan and the unpaid buisness bills?
The first question is whether the business was incorporated (Inc., LLC, LLP, LP, etc.)

If the answer is no, then the business owner is liable for all the debts of the business.

If the answer is yes, then the business owner is generally only liable for:
1. Payroll taxes (940/941) to the extent he is a signatory on the payroll account;
2. Debts which he has personally guaranteed (such as the SBA Loan) (e.g., copier leases, leases, are often guaranteed).
3. Distributions in the form of equity (not W2 salary) taken when the company was insolvent.

He is generally not liable for debts such as utilities, phone, ad, etc. unless he has personally guaranteed them or the signature block appears to make the obligation a personal one.

Usually company "credit cards" are guaranteed by the person whose name is XXXXX XXXXX

SBA loans are typically guaranteed by the owner like you have mentioned.

I can't specifically speak to Kentucky law, but what I am describe is typical.

Let me know if I missed any portion of your question!
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Customer: replied 5 years ago.

Thanks for the quick and accurate answer!

I have another closed related question.


When the buyer bought the busienss, the seller misrepresented/inflated the earning and commited billing fraud to the government healthcare. The buiness broker representing the seller marketed the business as SBA pre-approved buisness.


The buyer overpaid the business and the fraud billing makes the business unable to run normally (because license issue of a professional working for the business). The buyer is seeking lawsuit on the seller to have the seller take back the business. So, if the business has to shutdown with unpaid bill (not SBA loan part), will the seller use this as a reason not taking back the business?