Would You Risk Your Home to Save Your Business?

A business owner confronts an excruciating choice between doing what’s right for his business and what’s right for his marriage.

Every so often, a conversation with a business owner lingers with me long after it’s over. I recently had one of those experiences with an owner who has had a particularly tough couple of years. Like many, he has weathered the pandemic, rising costs, and shifting markets — all the recent entrepreneurial storms — and he’s got the scars to prove it. To stay afloat, he borrowed heavily, taking out approximately $550,000 from online lenders and another $500,000 in an Economic Injury Disaster Loan. This represents a significant amount of debt for a service business with approximately $4 million in top-line revenue. 

The monthly payments on that short-term debt now run about $35,000 — a crushing burden that’s squeezing cash flow and leaving little room for anything else. Perhaps surprisingly, his situation improved somewhat when he recently refinanced shorter-term, smaller loans into one larger loan with slightly better terms. But the cash flow impact still hurts. To top it off, he has a monthly payment of approximately $2,300 on his EIDL loan.

But there’s a potential way out. If he refinances the high-interest loans with an SBA loan, his monthly payments could drop to roughly $7,200. That’s more than $300,000 a year in freed-up cash flow — enough to turn the business around. There’s just one problem: the SBA lender wants to put a lien on his house and use it as collateral.

Years ago, this owner promised his wife that he would never, under any circumstances, put their home at risk for the sake of the business. It was a boundary they set together — a way to separate family security from entrepreneurial risk. Now that promise is being tested.

At first glance, it’s easy to sympathize with his hesitation. A house isn’t just an asset — it’s safety, stability, security, a home filled with memories. Risking it for a business that’s struggling feels reckless.

But here’s the uncomfortable truth: the risk is already there. If the business falters and he defaults, creditors could pursue his personal assets, including the house. The safety he thinks he’s preserving might be an illusion. We discussed this at length during our call. I think he understood this, but was trying to pretend the issue didn’t exist. His next step will be to have this conversation with his wife.

The difference in his mind, I suspect, is that signing the lien is a deliberate choice, one that feels like a deliberate breaking of a promise. By contrast, defaulting on his existing loans would feel more like a passive outcome, one that is beyond his control. Entrepreneurs frequently live in that tension between the things we say we’ll never do and the things we might have to do to survive.

This isn’t really a financial question. The math is compelling. The heart of the dilemma lies in trust and identity. When he told his wife he’d never risk the house, he wasn’t just making a financial commitment. He was offering reassurance: No matter what happens, our home is off-limits. This promise felt real to him. Using the home as collateral would feel different. 

In my opinion, the logical course of action here is to obtain an SBA loan, which may be possible but won’t be easy. With the restructured debt and dramatically reduced payment, he can start to breathe again, stabilize his cash flow, and make solid long-term decisions for his business. He will likely save his house and his business if he chooses this option. 

But if he chooses this plan, he feels he would be crossing a red line, perhaps destroying his wife’s trust. And yet, if he doesn’t restructure his current debt, those monthly payments make it far less likely that the business will survive. He could still lose the house and the company—even though he might feel as though he’s keeping his promise.

No spreadsheet can solve this problem. It’s a profoundly human conflict: loyalty versus logic, love versus leverage. I don’t have a neat answer. I’m not sure there is one. But I know these are the decisions that define us as entrepreneurs—not the ones about marketing or hiring, but the ones that force us to look inward and ask what we’re truly willing to risk. 

What would you do? Would you pursue better credit terms to give the company a better shot? Or would you pass on applying for the SBA loan and signing the lien to keep the promise? I’d love to hear how you’d answer.