Q: I've run a successful company for the past 20 years. There's a new bank in town offering me a line of credit to attract my business. I was both floored and furious when the loan officer told me that my husband would need to guarantee the loan. I explained that my husband is an employee of the company and has no ownership, but the bank still insists that he guarantee the loan. They're offering me a great deal, but how can I convince them that this is a ridiculous condition?
A: You've made a great start. You should not only object, but object strongly. However, make sure that all your facts are on paper and before the officer. This could all be the result of a simple error on the bank's part. Reiterate that your husband has no ownership in the company, that his guarantee has not been required in the past and that you would like to know what's changed in your financial picture to require it now.
Also, find out the bank's policy on spousal guarantee. The
only legitimate reason I can see to require your husband's
guarantee is that he may have an interest in some of the collateral
to be pledged, such as a home or assets that are in both of your
names. If that's the case and you plan to pledge those assets,
he'll have to guarantee. Because the bank approached you, it
may want your business passionately enough to make concessions, but
be fair. Both you and the bank are in business to make money, so be
sure you've presented all the facts so both of you can get a
great deal and start building a strong banking relationship for the
Doug Hood is a co-founder of Rainmaker Capital Corp., a capital acquisition consulting firm in Cartersville, Georgia. Co-founder Marilea S. Hood contributes to this column. Send questions or anecdotes via e-mail to firstname.lastname@example.org.