I have a client that really struggles with not sinking his business in massive amounts of debt. When I met him three years ago he had huge amounts of credit card and bank debt for equipment. We wrapped all of his debt up into an SBA loan at a low rate. I tried to drill into his head (verbally in meetings) that he cannot take on additional debt without discussing it with the bank that holds the SBA loan because there are loan covenants he must meet.
Fast forward to today and I'm updating his books and he bought a bunch of equipment on loans with a different bank. I reached out to him and asked him if he considered the covenants when he took on additional debt. Covenants? What are loan covenants? You never told me about this. My response: I did tell you about it multiple times and the bank tells you every year when they request your financial statements as part of their annual review process to ensure covenants are met. You also signed the SBA loan promissory note which explains the covenants.
You just can't help this guy. His business would be killing it if he would just stop buying hundreds of thousands of dollars of equipment he doesn't need. Anyway...I have no liability on this issue should they call his loan, right? It's not my fault that he didn't read or care to remember to document he signed. I wish I had an email to back up the fact that we discussed this multiple times.