Why is it necessary for banks to require a guarantee before making loans available to smaller firms ?

5 Answers

Relevance
  • 4 weeks ago

    So that the bank doesn't lose money if the small firm doesn't pay back the loan.

  • 4 weeks ago

    To protect their money for Christ's sake.

  • Anonymous
    4 weeks ago

    Most (around 90%) small businesses will fail in the first five years. The bank doesn't want to be left high and dry in the event that happens to you. So you must personally guarantee the loan with your own personal credit and assets on the line. That way if your business fails the bank has someone and something to come after to recover the debt, or at least a portion of it.

  • Anonymous
    4 weeks ago

    Banks hate to lose money.

  • How do you think about the answers? You can sign in to vote the answer.
  • 4 weeks ago

    Because such a high percentage of businesses fail and they want the money to be repaid.

Still have questions? Get your answers by asking now.