You can get a business loan with no personal guarantee, but it is the exception, and it usually happens because something else carries the lender's risk, such as the equipment being financed, invoices owed by creditworthy customers, a lien on business assets, or a company large enough that its own financials stand on their own. Most small-business financing asks the owner to sign. In the Federal Reserve Banks' 2026 Report on Employer Firms, 59% of firms with debt had used a personal guarantee to secure it, more than the 51% that had pledged business assets. This guide explains what a guarantee actually commits you to, where business loans without a personal guarantee are realistic, and how to limit a guarantee when you can't avoid one.
Why lenders ask for a personal guarantee
An LLC or corporation keeps the business's debts separate from the owner's personal finances. That separation is the reason most owners form one, and it is also the reason lenders ask for a guarantee. Without it, a lender to a small company can only collect from the company, and a company in trouble often has little left beyond a few months of receivables, some used equipment and a bank account that was drained before the payments stopped.
A guarantee closes that gap. It gives the lender a second source of repayment and a sign that the owner has every reason to keep the business paying, which is why it shows up on everything from bank term loans to online lines of credit.
What a personal guarantee actually commits you to
A personal guarantee is a promise to answer for the business's obligation if the business does not meet it. Contracts often spell it "guaranty." The details decide how much of your personal money is exposed, and they vary more than most owners expect.
Unlimited and limited guarantees
An unlimited guarantee makes you responsible for the whole unpaid balance, and usually for interest, fees and collection costs on top. As NerdWallet explains in its guide to SBA guarantees, the lender is not required to try other sources of repayment before coming to the guarantor.
A limited guarantee caps what you can owe. The cap can be a specific dollar amount, a percentage of the loan, a period of time, or the value of particular collateral you pledge. A guarantee capped at $50,000 on a $200,000 loan, for example, puts $50,000 of your personal assets at risk rather than $200,000 plus costs.
Joint and several, when there is more than one owner
When two or more owners sign, the guarantees are often joint and several. Under that principle, as Cornell's Legal Information Institute describes it, the party owed can collect the full amount from any one of the people liable, and that person is left to recover the others' shares from them. If you own 30% of a company and sign a joint and several guarantee, the lender can still pursue you for 100% of the shortfall.
Payment guarantees and performance guarantees
A payment guarantee covers the debt itself. If the business doesn't pay, you do. A performance guarantee, sometimes called a validity guarantee, covers the business's promises instead. It is common in merchant cash advances, where the funder buys a share of future sales rather than lending a fixed sum. In a typical version, the owner guarantees that the information on the application is true and that the business won't break the contract by moving deposits to another account, blocking the funder's debits or selling the business without notice.
The difference matters most when sales fall. In Irwin Funding v Dexter Young Cattle Feeding (2022), a New York court refused to treat a guarantee titled "Guarantee of Performance" as a simple promise to pay, because it made the owner responsible for both payment and performance. The funder's claim rested on a breach of a non-money term, the merchant's duty to warn the funder before its account ran too low to cover the debits. The case is also a reason to read the default section alongside the guarantee, since that contract set collection costs at 30% of the receivables outstanding at default, and terms like that are worth comparing across offers before you sign.
Collateral and a guarantee are different promises
Collateral is a specific asset pledged to the lender, such as a truck, a machine or a building. If the loan goes unpaid, the lender can take and sell that asset. A guarantee is a promise from a person, and it reaches whatever that person owns unless the guarantee itself is limited.
Take an illustrative example. A contractor finances a $60,000 truck, the truck secures the loan, and the business defaults with $40,000 still owed. If the truck sells at auction for $28,000, the lender is short $12,000 plus its costs. With no guarantee, the lender's remaining claim is against the business. With an unlimited guarantee, it can pursue the owner personally for the difference and the costs of collecting it.
An unsecured business loan is one where no specific asset is pledged, and most unsecured lenders replace that missing collateral with the owner's guarantee, a general lien on business assets, or both. Plenty of offers are a no collateral business loan without being a no personal guarantee loan.
SBA loans require a guarantee from owners of 20% or more
If your goal is avoiding a guarantee, SBA loans are off the table. The Small Business Administration states on its Form 148 page that individuals who own 20% or more of a small business applicant must provide an unlimited personal guaranty. NerdWallet's summary of the SBA's procedures adds the edges of that rule. Spouses who own 5% or more must also guarantee when the couple's combined stake reaches 20%, and if no one owns 20%, at least one owner must still provide an unlimited guarantee. Lenders can also ask smaller owners for a limited guarantee.
That trade is often worth making, since SBA loans tend to carry the longest terms and lowest costs available to small companies. If that is the right fit, our SBA and bank loans page explains the paperwork and timeline.
Where business loans without a personal guarantee are realistic
The routes below come with fewer personal guarantee demands, though each funder sets its own policy and many still ask. What they share is a source of repayment the lender trusts more than the owner's signature.
Equipment financing secured by the equipment
Equipment loans are secured by the machine, vehicle or technology being bought, so the lender has a concrete asset to recover. NerdWallet notes that this makes it easier to find equipment lenders that don't require a personal guarantee, though many still ask. Equipment that holds its value, a larger down payment and a few years of steady revenue all strengthen the case. Our equipment financing page covers amounts and terms, and how equipment financing works walks through loans, leases and what funders check.
Invoice-based financing
Invoice financing and invoice factoring rest on what your customers owe you, so the lender cares most about whether those customers pay. NerdWallet reports that this makes these lenders less likely to require a personal guarantee, though some still do. Where one is requested, check whether it covers the debt or only your promises, such as not redirecting customer payments to another account. Today Capital Group does not arrange invoice factoring. It is an option worth pricing elsewhere if your business bills other companies on 30 to 90 day terms.
A business line of credit with no personal guarantee
Lines without a guarantee do exist, and NerdWallet notes that they usually take another form of security, such as a first-position lien on business assets. For most owners the realistic version is a line where the guarantee is limited, or where the funder leans on deposits and the guarantee covers conduct rather than the balance. Our guide to the business line of credit explains secured and unsecured lines and how draws are priced.
Corporate cards for larger companies
Corporate card programs are underwritten on the company's finances instead of the owner's. One major issuer's corporate program, for example, is aimed at middle-market companies with roughly $4 million or more in annual revenue and offers corporate liability with no personal guarantees on employee cards. Small-business cards are a separate product with their own terms, so check which one you are applying for and what the application asks you to sign.
Larger companies with strong financials
A company with several years of audited or reviewed statements, real equity, little debt and steady profit can sometimes borrow on its own credit, because the lender is relying on the business rather than the person. Even then it is a negotiation, and owners who get a guarantee waived usually have competing offers in hand.
Revenue-based financing
Revenue-based financing is approved mainly on your deposits, usually needs no collateral, and is repaid as a share of sales. Most agreements still include an owner guarantee, and here the type matters more than whether one exists. When the guarantee covers the business's promises rather than the balance, and the contract has a reconciliation clause that lowers payments when sales fall, a slower month means smaller payments rather than a claim against you personally. Our revenue-based financing page explains how repayment works, and how to qualify for a merchant cash advance covers what funders read on your statements.
How to avoid a personal guarantee, or shrink the one you sign
When a lender won't drop the guarantee entirely, the terms are often more flexible than the first draft suggests. These are the requests worth making.
- Offer specific collateral instead, such as a piece of paid-off equipment, a certificate of deposit or a property with equity, so the lender has a defined asset in place of your whole balance sheet.
- Ask for a cap, either a fixed dollar amount or a percentage that matches your ownership share, so a 25% owner guarantees 25% rather than all of it.
- Ask for the guarantee to fall away after a set number of on-time payments, or once the balance drops below an agreed figure.
- Ask to carve out specific assets, such as your home or retirement accounts.
- Ask for several liability rather than joint and several when there are co-owners, so each person answers only for a share.
- In a merchant cash advance, ask for a performance-only guarantee and confirm in writing that a drop in sales is not a default.
Spouses are a separate point. For loans and lines of credit, Regulation B bars a creditor from requiring your spouse's signature when you qualify on your own for the credit requested, and while a creditor may ask for a guarantor when one is needed, it cannot insist that the guarantor be your spouse. Exceptions apply when the spouse's property is being relied on or pledged, and the SBA's own ownership rule above is separate.
Questions to ask before you sign
- Is this a guarantee of payment, a guarantee of performance, or both, and which sentence says so?
- Is the guarantee unlimited, or is it capped by an amount, a percentage or a date?
- If there are other owners, is the guarantee joint and several, and can each of us sign for a share instead?
- What events count as a default, and does a drop in sales, a returned payment or a change of bank count as one?
- Does the guarantee cover attorney fees and collection costs, and are those a fixed percentage or actual reasonable costs?
- Can the lender come to me before it tries to collect from the business or sell the collateral?
- Does the agreement include a confession of judgment, an arbitration clause or a choice of another state's law?
How we handle the guarantee question when you apply
One application goes to the funders in our network, and the offers come back side by side. Before you sign anything, we go through each one with you, including what the guarantee covers, whether it is limited, and what counts as a default. When two offers are close on cost, a narrower guarantee is often the reason to choose one over the other, and it is fair to ask a funder to move on that point. Applying costs nothing, there is no obligation, and most funders prequalify from bank statements and a soft credit pull.
Start with the short application and four months of business bank statements, or call us at (818) 351-0225 and tell us what you need the money for and which terms matter most to you.
Questions about business loans and personal guarantees
Can a business get a loan without a personal guarantee?
Yes, but it is uncommon for small companies, since 59% of firms with debt in the Federal Reserve's 2026 Report on Employer Firms had used one to secure it. The realistic routes are financing secured by a specific asset such as equipment, invoice-based products that rely on your customers' credit, bank lines secured by a lien on business assets, corporate card programs for larger companies, and loans to established businesses whose own financials are strong enough to stand alone.
How to avoid personal guarantee on business loan?
Give the lender something else to rely on, such as specific collateral, a larger down payment or stronger financial statements, and negotiate rather than accepting the first draft. If the lender won't waive it, ask for a cap tied to a dollar amount or your ownership share, a release after a set number of on-time payments, carve-outs for your home and retirement accounts, and several rather than joint and several liability with co-owners.
Who is eligible for an unsecured business loan?
Eligibility depends on the lender, but unsecured offers generally go to businesses with steady deposits, a track record and owners willing to sign a guarantee, since there is no pledged asset behind the loan. The funders we work with generally look for at least a year in business and about $20,000 a month in revenue. If you're not there yet, apply anyway, because some funders work with newer or smaller businesses, and we'll tell you what's realistic.
Is a personal guarantee the same as collateral?
No, because collateral is a specific asset pledged to the lender, while a personal guarantee is a promise from a person that can reach whatever that person owns unless the guarantee is limited. A loan can have collateral and a guarantee, either one alone, or neither, and an unsecured loan without collateral very often still carries a guarantee.
Can a lender require my spouse to sign the guarantee?
For loans and lines of credit, Regulation B generally bars a creditor from requiring a spouse's signature when the applicant qualifies alone, and it cannot insist that a required guarantor be the spouse, though exceptions apply when jointly owned or community property is being relied on. SBA loans are different, because the SBA requires a guarantee from a spouse who owns 5% or more of the business when the couple's combined ownership is 20% or more.
