Protecting Assets in Case of SBA Default

April 27, 2023
by a searcher from University of Georgia in Atlanta, GA, USA
Alice and Bob each took a $2mm SBA loan to buy identical businesses. However, their assets differ:
Alice’s assets:
$500k in home equity
$1.5mm stock portfolio
Bob’s assets: $500k in home equity
Both businesses became obsolete overnight due to a new ChatGPT3 feature. They both default.
Questions:
1) Do Alice and Bob lose all their assets?
2) How could Alice protect her $1.5mm in stocks?
For example, assume Alice is happily married to Zach. Wouldn’t it make sense to legally divorce Zach before applying for the loan? The divorce agreement could have Zach keep the $1.5mm in stock and have Alice keep the $500k in home equity. Then Alice could apply for the SBA loan using only her home equity as collateral.
What other options does Alice have to protect her assets?
from University of Missouri in St. Louis, MO, USA
from The University of Georgia in Atlanta, GA, USA
If Bob and Alice are also UGA grads, then Arnall Golden & Gregory in Atlanta would be the best place to go for that sort of expertise.
Hope this helps. Go Dawgs.