Major help needed! - CSS Profile & Parents' Business

Paying for College
1

OK, so my parents and I are majorly confused on the business section of the CSS Profile. We started it last week but are currently finishing it up today. Now:

For the BA section of the profile we are told to list the total current market value of the business and the debt we also owe.
My parents say that the debt that they owe on the business is much larger than the current market value, but when we want to submit the profile the program is telling us that the current market value cannot be less than the debt owed.

“You reported that your parents’ business had a value less than the debt owed on it. Please review the responses in the Parents’ Business Assets to these questions (PROFILE Help Codes BA-120 and BA-125) and correct if appropriate.”

EDIT: More info - our business is not an actual “business” as in it’s not a building. They run it from home. The inventory that we store at home is the “business”. My parents are saying that they used a home equity loan to put money into the business. The loan is higher than what the market value is.

2

Is this what happened?

  1. They took a loan to buy inventory for the business.
  2. They sold some inventory but did not use the money received to pay down the business loan related to the products sold. Was the money used for household expenses?

If so, it sounds incorrect to say that the business (i.e. the inventory) is worth less than the debt because some of the debt is personal now rather than business.

3

The value of the business isn’t just what you could get by a garage sale for the current inventory- customer lists? Vehicles/trucks/computers, other assets? The annual cash flow from ongoing sales? Special knowledge or expertise by employees?

Is this an actual business operated for profit which generates the income you all live on, or a hobby like selling crafts on Etsy, even if you financed the business with a home equity loan?

If this is the business which supports your family, it’s going to be hard to prove that the business has zero value even if there is a debt currently.