The SMB/ETA community on X overlaps quite a bit with the real estate entrepreneurial community there, and what's being discussed there motivated me to bring this conversation to the ETA community.

Just yesterday, we learned of a fellow entrepreneur who tragically took his life amid financial strife, facing bankruptcy due to falling underwater on too much PG’d (personally guaranteed) real estate debt. He wasn't someone I knew personally, so please, no need for condolences, but his story hit close to home. He was a man who loved his family deeply and didn’t want to die, but lost sight of the light at the end of the tunnel. This community is heartbroken, because we see what he couldn’t in the moment – that these situations are temporary, and you can rebuild. In fact, the U.S. bankruptcy process is designed for it.

We often don't talk enough about mental health, especially in the entrepreneurial world where the pressure to succeed is immense. So first of all - if you're struggling, please talk to someone, be open to accepting help and remember, you can recover from any financial situation and thrive.

That said, this is why I’m posting here specifically. I hear from too many aspiring acquisition entrepreneurs lately who are very excited about a deal and want to fund the acquisition with a multi-million dollar SBA loan that they will PG. And these SBA loans aren’t at 5-6%, they’re at 10-11% now by the way! I almost always believe the person with whom I’m speaking doesn’t have a sufficient grasp on the risk and downside scenarios of their deals – they may be blinded by that due to the excitement of the opportunistic features of the deal.

So if you’re considering taking on some of this PG’d debt, I encourage you to please spend thorough time on risk assessment and mitigation. Find folks here who can give you a 2nd/3rd/4th/10th eye on it, until you’re not hearing any new risks or concerns raised and can confidently conclude you have an exhaustive risk assessment. Make your downside projections conservative enough, and then make a solid plan as to what would be your approach if those came to realization. What financial support and resources do you have if you had to personally cover that debt? Then project what it would mean to your mental health, to your identity, to your family, if those downside scenarios were realized. Make sure the PG’d debt is worth it. Market conditions changed faster than many were expecting on the CRE side and many were unprepared.
I hope this resonates with anyone who needs this. Wishing you all health, happiness, and prosperity