Page 8 - 2018 TDA Winners Booklet
P. 8

Financial Solutions for Business Owners
     Financial Solutions for Business Owners
    Financial Solution for Business Owners
                                                                                        Many a business owner is unaware   creditor to first use all possible means   THE DEBT-FREE SOLUTION
                                                                                        of the fact that signing surety for   to recover the debt from the principal   This problem can be solved by
                                                                                        a business loan could place even   debtor. Only after every other   the business owner taking out life
                                                                                        their estate in jeopardy. Adv Kobus   possibility has been exhausted can   cover for the same amount they
                                                                                        Engelbrecht, Marketing Head of   the creditor claim from the surety.  signed surety for. Should they die,
                                                                                        Sanlam Business Market, discusses.
                                                                                                                                          their executor could then use the
                                                                                                                 If you are a co-principal debtor,   proceeds of the policy to repay
                                                                                        It is commonplace for business   however, you do not have that   the loan.
                                                                                        owners to sign surety for business   protection, as the creditor can
                                                                                        loans. Lending institutions require   decide which co-principal debtor
                                                                                        this form of security to cover                    The benefit of this action is twofold:
                                                                                        their perceived risk in lending to a   they want to claim the outstanding   The business will be debt-free, and
                                                                                        business. However, what most of   loan amount from. Moreover, should   the business owner’s estate will be
                                                                                        these business owners do not realise   you, as the co-principal debtor,   unencumbered, leaving their assets
                                                                                        is that they are not only signing   die, the creditor can claim the   to their dependants.
                                                                                        surety – they are also signing as   outstanding loan amount from your
                                                                                        co-principal debtors.    deceased estate. If this happens,   Every business owner should seek
                                                                                                                 the money you provided to take   the advice of a qualified financial
                                                                                        What does this mean?     care of your dependants would   planner to ensure they have
                                                                                                                 most probably be used to pay the   appropriate solutions in place to
                                                                                        As a surety you are protected by a   creditor, which could leave your   avoid the unintended consequences
                                                                                        principle of the law that requires the   dependants destitute.  of signing surety for business debt.


























     Unintended



     consequences of

                                                                                        Contact: Sanlam Business Market
                                                                                        Tel: 0860 100 539
     signing surety                                                                     www.sanlamsme.co.za
                                                                                        Email: sme@sanlam.co.za

                                                                                                                                                For generations to come
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