n these challenging times, many business owners are facing circumstances that they have never faced before

People are standing down staff, surviving off jobkeeper, negotiating with creditors and putting money into their businesses themselves.

Given the multiple pressures that business owners are faced with, it’s easy to make decisions for the here and now with no thought of the future.

It is critical that business owners take care of their personal financial position while taking care of their businesses interests.

Now, more than ever, business owners are funding their businesses by redrawing on their mortgage, investing their personal savings, leveraging personal assets and borrowing from family and friends.

All credit should be given to business owners who are ‘backing themselves’ to be successful in the future, however, in circumstances when things don’t work out as planned, ignorance is not bliss – it can be fatal to both your personal circumstances and your business.

The different legal identity between a director/shareholder is not usually front of mind, but it ought to be.

Business owners should take good advice and hasten slowly when injecting financial support into their business.

Directors should put in place appropriate loan documentation between themselves personally and their company, as well as registering any loans on the PPSA. The PPSA is not just for third party creditors, it’s also available to business owners to protect their personal interests – separating out you from your company.

In the event that your company has to enter into some form of external administration, holding an appropriate and valid PPSA registration affords you a significantly greater opportunity to influence the ultimate outcome of any external administration, it also increases:

• the options available to you to recover your personal investment; and
• the likelihood of you being able to save your business.

Do everything within your power to save your business now, but do not do it to the detriment of your personal position in the future.