‘You’re not bankable’: Dave Ramsey crushed this 27-year-old Atlanta man's ice business dream — how to tell the difference between an opportunity and a ‘trap’

Small businesses are work

Michael told Ramsey he was looking for advice on how best to secure the funds to buy out the owner of an ice business he currently works for. But as he explained, the owner has indicated his desire to sell the company within the next two years, which includes a building with existing tenants, for an asking price of $1 million.

Michael’s interested in taking over the business but needs the capital to buy it himself.

The hosts were skeptical about Michael’s devotion to the ice business, but he told them he’s happy he was exposed to it so young because he sees great opportunity in the field.

He’s also not technically in a bad place financially — Michael and his wife have worked diligently toward clearing their debts and improving their overall financial standing. But he’s also a 27-year-old still living in his parent's house with no meaningful assets, and so Ramsey doesn’t think he’s prepared to make this step. He went on to talk some sense into Michael, with co-host John Delony backing him up, cautioning Michael this wasn’t an opportunity, rather a “trap.”

“No bank's going to loan you this,” Ramsey bluntly stated. “You don’t have the assets, you don’t have the income — you’re not bankable. Buying and running a small business will take the bone marrow out of you. It'll drain you, it'll squeeze you like yesterday's dish rag, man."

Ramsey’s overall take is that being financially stable and debt-free before deciding to buy and own a small business is absolutely crucial. This is the same advice he’d give to his own son.

“I would say you need a better, stronger personal financial foundation before you start talking about buying and running a small business,” remarked Ramsey. “You got a car payment and you live with your momma. You’re not ready to do it.”

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Prioritize financial stability

The U.S. Chamber of Commerce reported that there are 33.2 million small businesses in the U.S. Combined, these small businesses account for 99.9% of all U.S. businesses as of 2023.

At the same time, roughly half (an astonishing 49%) of U.S. adults admit they wouldn’t be able to cover a $1,000 emergency in cash as of 2023.

One way to fund the purchase of a small business is through an SBA (Small Business Association) loan. They usually range from $500 to $5.5 million. However, they do come with some downsides and risks:

• Borrowers are usually required to make a down payment
• Borrowers with low credit scores usually won’t qualify
• Putting up collateral could be required
• There’s typically a slow approval process
• You may be personally liable if the business defaults

If you’re looking to join the tens of millions of Americans who’ve made the jump into entrepreneurship, be sure that you’re not among the 49% who can’t afford an emergency expense. Personal financial stability should be of paramount importance before taking on any business venture.