3. You’re a bank officer considering making a loan to a small family-owned company.

The firm’s principal owner is a hard-working, conservative woman who has built up the company over a number of years. However, two of her grown children are now active in the company’s management. They’re both bright and hard working, but have a reputation for taking business risks as well as for extravagant living.

You’d like to make the loan, but are concerned about a potential change in the character of the company. How might you make the loan and still protect your bank’s investment?