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socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 38911
Experience:  Retired (mostly)
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Had a business with a group of 5 guys all owners. We created

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Had a business with a group of 5 guys all owners. We created the business under as a S Crop so no persoanl assets would be affected. The 5 of us signed one loan for the company which we paid off in a short amount of time. Then 2 of the owners decided to take out a loan, at the same back as we all used before, against the company which the other 3 wanted no part of, so the bank had those two sign persoanl agreements and take out a persoanl for the loan.

The ecomomy tanked as well as the business so we payed off what little debt the company could which amounted to about 33% of the loan the 2 guys personally signed for, and close the business. The bank now points out a sentence in their loan papers that points out "Signing for this document holds the signee responsible not only paying off this loan but any other loan take out under the company". Which the bank now points out is all of us. Is this common?
Submitted: 7 years ago.
Category: Business Law
Expert:  socrateaser replied 7 years ago.

Yes, it's common. But, common or uncommon, if it was agreed to, then it's binding, absent proof of some conscience-shocking unfairness.

 

However, it's not clear to me how the two individuals' making a personal guarantee for the loan, makes the rest of the owners personally liable. It just makes the company liable. So, unless you are one of those two "guys," I don't understand the concern. Maybe you can clarify for me.

 

Thanks.

 

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