Legal Question in Credit and Debt Law in Texas

I am trying to find out if I am liable for the repayment of the below loan since it was secured with the equity of the business, with the business subsequently failing before the doors even opened?

Below is the contract that was drawn up concerning the loan with name redacted for privacy reasons.

Business Development Loan Contract

This Business Development Loan Contract is executed this ____ day of August, 2008 by

�Lender Business Name�, LLC, lender,

and borrowers �Business� Day Care, and �1st owner�, and �2nd owner�, singly and severally.

Borrowers require $8,000 in order to purchase and install certain required alarm systems necessary to open their Day Care facility at �Address�, El Paso, Texas. Lender agrees to lend this $8,000 amount. Borrowers agree to repay the $8,000 to lender by March 1, 2009 and to pay 18% interest on the outstanding balance to be compounded monthly according to an agreed schedule. A $400.00 loan origination fee shall be charged and paid on or before October 1, 2008. Payments shall be made at least monthly and will not be less than $500.00 per month. There will be no prepayment penalty and interest will be adjusted for early payment. This interest is deemed fair and reasonable to each of the parties and is held incontestable by each of them.

Borrowers agree not to incur any further debt, prior to the full payment of the amount owed, either personally or through the �Name of business� in excess of $2,000, without the prior written permission of �Investor, LLC. Borrowers agree to arrange automatic monthly payments from their bank account. Borrowers pledge their entire equity in �name of business� Day Care to secure this loan.

Dated this _______ day of August, 2008

_______________________________ borrower

�1st owner�

_______________________________ borrower

�2nd owner�

_______________________________ borrower

�Business Name� Day Care

________________________________ lender

�Lender business name�, LLC by

�Lenders name�, sole member

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