What is a Business Continuation Agreement primarily used for?

A Business Continuation Agreement, often referred to as a Buy-Sell Agreement, is primarily used to facilitate the transfer of ownership of a business in the event of an owner's death, disability, or other triggering events. This arrangement ensures that the business can continue operating smoothly and that ownership transfers according to predefined terms, thereby protecting the interests of all parties involved.

Such agreements typically outline how the business will be valued, the methods by which one owner can purchase the other’s interest, and how funds to complete the purchase will be secured, often utilizing life insurance policies to provide necessary cash upon the triggering event. By having this agreement in place, the business avoids potential disputes or complications that could arise among heirs or partners, thereby providing stability and continuity for the business.

The other options do not accurately capture the primary focus of a Business Continuation Agreement. For example, the provision of health insurance is not the primary purpose of such agreements; while securing loans is crucial for many businesses, this is also not the focus. Business licenses renewal is an important operational aspect but is unrelated to the ownership transition that the Business Continuation Agreement addresses. This clarity serves to emphasize why option B is the most appropriate choice.