Small Business Loans

March 21st, 2011 |

As a general rule, we recommend that you do not personally guarantee their business unless you are in desperate need of money to keep their business going. If your company goes under, a personal guarantee to a bank will come after your personal assets. The first thing you will lose is your home as often is the greatest asset that can be liquidated to pay your business loan. By ensuring a personal loan, which circumvent any protection afforded by incorporation.

Even worse by a personal guarantee may arise if married. If you are married and have personally guaranteed business, it is possible for the bank to freeze the personal assets of you and your spouse which essentially throws his family all his personal property. That makes for a tense dinner.

The reality is that many entrepreneurs have no choice but to his personal assets in order to get a loan for your business. Banks generally flatly refuse your loan application if you express your desire not guarantee a personal loan. Even the SBA or Small Business Administration states that an applicant who holds a more than 20% in a company must personally guarantee the business loan to qualify for a security company. As you know, the SBA is often the last resort for business owners who have been rejected by the banks.