The founders of an entrepreneurial business must avoid personally lending money to the business, as such debts are considered to be unsecured investments that need not be paid back, should the business fail.

Question

Quizplus · Accepted Answer

Personally lending money to the business creates a debt that the business is obligated to repay, regardless of whether or not it fails. These debts are considered to be secured investments that the founders can use to seek repayment in the event that the business fails.

The Founders of an Entrepreneurial Business Must Avoid Personally Lending