I've searched the forum and found great info on the SBA program, but most posts and discussions revolve around finding a loan without a PG. Given my search parameters, I don't anticipate that being an option for me, so I'm hoping to get some guidance on two things:
1) What is the worst case scenario if the company folds?
2) What actually happens to the guarantor when a company folds?

I've heard advice ranging from "SBA and the bank will work hard to keep you solvent as long as you communicate" to horror stories of businesses going under due to the weight of loans on the P&L.

Nobody plans to make a bad purchase, and I am being exceptionally conservative in my modeling (looking for 1.5x coverage tested at 12%), but there's always a possibility that things go south. With that in mind, I'd like to understand what is likely to happen if I default on a large loan (likely $3m). A few questions I'm hoping for guidance on:
- Is it true that (in TX) your home is off limits if you default?
- Is insurance (the SBA version of PMI — whatever it's called) optional, and what does it actually do for you?
- Can they do things like garnish wages if you don't have anything they can take?
- Are there any protections like filing bankruptcy that you can use to avoid being in dept forever?