Financing a small business can be hard to do and can lead to a lot of questions. If you are looking to get a small business loan then you will want to make sure that know what you are looking for and how you are going to make it all happen. If you are looking for no personal guarantee SBA loans there are several things you should know first.
Do No Personal Guarantee SBA Loans Exist?
An SBA loan is one that is guaranteed by the Small Business Association (SBA). The SBA is a government funded program that helps small business owners because when the SBA guarantees your loan a lender (such as a bank) is going to be more likely to fund your business. However, there aren’t any no personal guarantee SBA loans.
â There are no personal guarantee SBA loans because the Small Business Association requires that you give a personal guarantee if you own 20% of the business or more.
â They will want your signed guarantee and if your business doesn’t have adequate assets they will also want you to put your personal property on the line.
â While the SBA is there to help you get the money that you need for your small business, however the lenders still want you to pay and they will work hard to make sure that you are going to live up to your end of the bargain.
Limited SBA Loans
While you won’t be able to get no personal guarantee SBA loans, you may be able to get a limited SBA loan. The limited loan that is limited in one way or another. Some are limited to a specific portion of the loan about. In this case you would only have to pay back a portion if the whole business should fall apart. Other limited loans, limit how much of your personal property and assets are on the line.
No Personal Guarantee Small Business Loans
While no personal guarantee SBA loans don’t exist, there are no personal guarantee small business loans. While you are likely to believe that your small business has what it takes to make it there are a lot of advantages for choosing a loan where you don’t have to sign a guarantee and whenever possible you should do that.
â It’s a good idea to shop around because if you can find a loan you don’t have to sign a personal guarantee with then you will be protecting yourself in the event that something doesn’t work out. While the hope is definitely that everything will work out wonderfully and that your small business will soar, it doesn’t always work out that way.
â In some cases you can still be sued for a small business loan that your business can’t pay back, but your liability will be less then if your personal property is collateral and you have provided a personal guarantee.
â If at all possible you should find a business loan that is guaranteed by the SBA because you will be able to get a better deal if you qualify for one of those. If not then you should turn to the Small Business Association’s loans.
Limited Small Business Loans
More and more small business loans are looking for that personal guarantee so while you won’t find a no personal guarantee SBA loan and you might not qualify for a no personal guarantee small business loan, you may find a limited liability small business loan. Like the limited SBA loan this will give a limited amount that you will have to pay back or a limited number of your assets that will be used as collateral.
Can You Get Out of a Personal Guarantee
If you couldn’t obtain a no personal guarantee small business loan and because there aren’t any no personal guarantee SBA loans then you may find that you are in a bit of trouble with your personal property on the line. If this is the case then you need to work with your lender to make sure that you are working to pay off the loan. In some cases you may be able to get your personal property off the line after a portion of the loan is paid off. It is important to talk to your lender as soon as you know that there is a problem so that you can work toward a solution that will work for you.
While no personal guarantee SBA loans would be a wonderful thing, they are not currently an option when applying for small business loans. If you are looking for a small business loan you should search for the no personal guarantee loan first. Then look into limited liability loans. Next check to see if you can get a limited liability SBA loan. All of that should be done before you take an SBA loan with your personal guarantee and your personal property and assets on the line.