Month: February 2014

Cut personal credit ties to a failing business

The past few years have pushed many small businesses to the breaking point. Some business owners have had partners or others use personal credit for the business putting liability on the borrower, not the business. Elaine Pofeldt interviewed Valcor CEO David Sussman for this article.


QuestionDear Your Business Credit,

I am the president, but not an owner, of a failing corporation. I am the guarantor for three business credit cards with zero balances but with substantial credit limits. How may I close the accounts without having a negative impact on my credit score? – Robert


Dear Robert,

I’m sorry to hear about your company’s troubles. The past few years have pushed many small businesses to the breaking point.

Your first priority should be to close those cards — as soon as possible. Having those cards in your name brings you tremendous personal liability, says David Sussman, CEO of Valcor, a consulting firm that advises troubled small businesses and midsized firms on matters such as debt mediation, restructuring and raising capital.

You have taken on a financial responsibility for a company at which you do not have complete control over financial decisions. Although you are president, the owner is ultimately in charge.

While you may know and trust the owner, it is hard to predict what someone will do under the pressure of losing a business. That opens you up to a lot of financial risk. “The psychology of the business owner when the business is failing is not dependable or reliable,” says Sussman.