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#1962087 - 09/15/14 09:07 PM Defunct Business has No Income
Ryan Yager Offline
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Joined: Apr 2014
Posts: 21
IL
We have a loan to a business, that has gone out of business. However we keep extending their loan until an insurance check comes in. In essence these are reported as renewals. This business has no income, but we only report revenues as under $1 mil, over $1 mil. or Unknown. So with no income, is this "unknown" or under $1 mil. ??

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CRA
#1962103 - 09/15/14 09:30 PM Re: Defunct Business has No Income Ryan Yager
Kathleen O. Blanchard Online

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Kathleen O. Blanchard
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I would think long and hard about this. Is it reported as small business because of non-farm, non-residential collateral?

If it is not real estate secured, I would really ponder if it should be classified as a business purpose loan under 4a vs a personal loan to pay off a business loan workout (if it is to an entity, then it will stay under 4a and I won't get into credit issues.)

If the loan is classified properly, then report as under $1 million, just as you would an operating business with no sales.

3 is used for unknown (you do not know).
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#1976951 - 11/17/14 09:40 PM Re: Defunct Business has No Income Ryan Yager
Colorado Girl Offline
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If a business loan (guaranteed by several wealthy individuals) goes into default after the business is dissolved and the defaulted loan amount is divided and new notes are made to the individuals that had guaranteed the original business loan; are you saying, Kaybee, that the new notes should be considered personal to pay off a business loan workout? Versus commercial because the purpose is to payoff commercial debt?

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#1978697 - 11/24/14 08:01 PM Re: Defunct Business has No Income Ryan Yager
Colorado Girl Offline
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Or anyone?

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#1978714 - 11/24/14 08:24 PM Re: Defunct Business has No Income Ryan Yager
rlcarey Online
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rlcarey
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Galveston, TX
If I personally guarantee the loan and then need a loan to pay off my "personal" guarantee, how is that a commercial loan?
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#1978724 - 11/24/14 08:32 PM Re: Defunct Business has No Income Ryan Yager
Colorado Girl Offline
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Good question, that's my question too. I don't understand it, but my shop sees it as paying off commercial debt, thus commercial. Just trying to see what others thought.

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#1978728 - 11/24/14 08:35 PM Re: Defunct Business has No Income Ryan Yager
rlcarey Online
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rlcarey
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Galveston, TX
That is like saying I made $100,000 in my business this year that goes on my personal income tax form. I get a loan to pay my personal income taxes and the bank wants to classify it as a business loan.

That definition is just wrong - as is your shop in this case.

This is purely a loan to an individual to pay off a personal debt.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1978739 - 11/24/14 08:45 PM Re: Defunct Business has No Income Ryan Yager
Colorado Girl Offline
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I'm not sure that I understand the correlation of the example you give.

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#1978752 - 11/24/14 08:51 PM Re: Defunct Business has No Income Ryan Yager
rlcarey Online
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rlcarey
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Galveston, TX
It may have originally been related to business, but it coverts to "personal" when it comes to a personal guarantee or personal taxes.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1978774 - 11/24/14 09:42 PM Re: Defunct Business has No Income Ryan Yager
Colorado Girl Offline
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Posts: 67
OK, thank you.

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