Personal guarantee loan

Turn personal commitment into business opportunity

Signing a personal guarantee as part of a loan agreement is common. Get matched with trusted financing partners who will walk you through the process and help you make the best decision for your needs.

Find your best options

Here’s what you can get from our trusted partners:

Funding amount:
$3,000 – $600,000

Time to fund:
1-3 days

Term length
3 – 24 months

Getting approved is easier with a personal guarantee

Most lenders will require a personal guarantee when you apply for a business loan, even when you offer collateral. This is because they want to make sure you feel confident in your ability to pay the loan back. Even some unsecured business loans will sometimes require one, so don’t worry if you’re asked.

Personal guarantees are a part of the process with business financing including business credit cards and business lines of credit. When you make one, you may appear more “creditworthy” to the lender, and this may help your chances of getting approved for a business loan. In the rare case one isn’t required, you’ll likely be asked for a larger deposit or more collateral. A personal guarantee is normally the easier option as it keeps your business assets available and cash flow stronger.

If you’re ready to apply for a business loan and want to see what type of personal guarantee is required, our platform lets you find the financial providers that match your needs in just a few clicks.

  

  

There are two types of personal guarantees, limited and unlimited.

  • Limited personal guarantees limit the amount of assets the lender can seize up to the agreed-upon amount if your business defaults on the business loan.
  • Unlimited personal guarantees allow the lender to continue to seize and sell personal assets until they have recovered the amount of money remaining on the balance of the loan.

While personal guarantees are normally required for a business loan, you have the ability to negotiate whether they’re limited or unlimited, and what that limit is. This is where having a trusted financing partner comes into play.

Our partners are vetted by our team to help ensure fair practices, including reasonable loan terms. That’s why business owners trust SmallBusinessLoans for finding financing. Click here to see which of our financing partners best serve your needs.

If you see “Joint & Several” in the loan terms, this means the lender can hold each of the business owners or people that made the personal guarantee liable in the case of default or choose a specific signer or two to seize assets from. For example, if your company defaults on your business loan and there are three partners that made a personal guarantee but one no longer has any assets to seize, the lender may seize assets from only one or both of the two remaining signers.

The benefits of offering a personal guarantee when you apply for a business loan include:

  • Reducing the risk to the lender as they have a way to cover their investment in your business if you default. This can increase your chances of approval.
  • Having more room to negotiate better terms including payback periods, rates, and deposits, as you are taking on more of the risk.

Frequently asked questions

Curious about personal guarantees and business loans? We've got answers to commonly asked questions.

A personal guarantee does not affect your personal credit score unless your business defaults on the business loan and you are unable to pay the balance of the loan back. At this point, the debt owed may be reported to the credit bureaus, and this can have a negative impact on your personal credit score until the debt is cleared. If there is no default, then there is no negative or positive impact.

As long as the business makes payments on time and does not default, there is no risk in terms of your assets being seized.

If you sell your shares in the business or no longer have any involvement, you’ll need to have the loan terms renegotiated and the new or remaining owners sign a new personal guarantee with an amendment freeing you of any responsibility.

Every loan is different and it depends on the lender. Making a personal guarantee can help improve your chances of getting an unsecured business loan, as the personal guarantee can work as an alternative to using collateral. Our trusted financing partners will work closely with you to find a solution that meets your needs.