Business 101: How to protect your startup from bankruptcy
You’ve taken the plunge and your small business venture has taken off. You're confident you'll defy statistics like 70-80% of South African small businesses failing within the first five years. However, you encounter your first hurdle when applying for a business loan – the bank requires you to sign surety to secure the financing.
Meera Naidoo, Head of Legal Support at SanlamConnect, says it is an industry-wide standard for banks to request a surety before approving a finance application. "A surety is a contractual obligation in which the business owner or shareholder acknowledges that they’re personally liable for the business’ debt if the business is unable to settle this debt This guarantee mitigates risk on behalf of the lender. Without it, if a business were to fail, the bank wouldn'...