Jim Incorporated His Small Business So That He Would Obtain

question 41

Multiple Choice

Jim incorporated his small business so that he would obtain limited liability on company indebtedness. But when he applied for a bank loan, the bank insisted that he give a personal guarantee the loan made to the corporation. Has the incorporating of the business helped Jim as far as limiting his business liability?

• A) No, since all venders and creditors will be more leery about extending credit.
• B) No, bankers become more cautious when they see individuals incorporate just to avoid personal liability.
• C) Yes, the bank has more confidence in issuing his company the loan.
• D) Yes, it might help in other types of liability, such as product liability.
• E) No, personal guarantees are required either way.

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Definitions:

Milieu Therapy

A form of psychotherapy involving the use of therapeutic communities, where the environment itself is structured to contribute to the rehabilitation of individuals.

Social Environment

The direct physical and social environment where individuals reside or where an event or development takes place.

Self-Respect

The regard for one's own well-being and dignity, often seen as a crucial component of psychological health and personal integrity.

Productive Activity

Any task or action that contributes positively to the economic, social, or psychological well-being of an individual or community.