Page 9 - 2018 TDA Winners Booklet
P. 9

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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