Small business owners in Tennessee often work their way to expansion, using profits from earlier sales to invest in new supplies, a larger building or any number of other items to help grow a business. In many cases business owners borrow money to get their companies off the ground. It is imperative for anyone trying to secure a loan to make sure he or she clearly understands the terms of agreement. Unfortunately, a business owner on the Pacific coast recently filed for bankruptcy, stating that his lenders pulled a fast one on him.
The business owner said that he fell prey to a bad loan. His company sells vegan burgers and started out making meals for customers from a food truck. He then borrowed (or, at least, thought he borrowed) $85,000 to move his business into a brick-and-mortar establishment. The business has been highly successful, yet that did not prevent a severe financial crisis.
Liabilities far outweigh assets
The vegan burger restaurant owner listed the company’s assets at $5,000 after having a revenue of more than $1 million in 2021. The company’s liabilities are approximately $250,000. In the meantime, the lenders say the contract between them and the business owner was not a typical loan but a “receivables purchase agreement,” and that he owes them more than $114,000. The restaurant is still open to the public, but the owner filed for Chapter 11 bankruptcy, and a hearing regarding the contract issues is scheduled for later in March.
Reach out for legal support if loan problems spark financial distress
If a Tennessee business owner encounters financial problems, he or she may be worried about losing the business. Bankruptcy is a valuable financial tool that, in many cases, helps wipe the slate clean and lay the groundwork for a return to financial stability. It’s helpful to seek immediate support from an experienced bankruptcy law attorney before financial problems get too out of hand.
