When you apply for a small business loan, most lenders require one thing that many entrepreneurs don’t love: a personal guarantee (PG). It’s a legal agreement that puts your personal assets — like your home, savings, or car — on the line if your business can’t repay the loan.
But what if you want to protect your personal finances? Are there small business loans with no personal guarantee at all? The short answer: Yes, but they’re rare — and they usually come with trade-offs.
This guide breaks down how personal guarantees work, when they’re required, and where you can find financing that doesn’t require one.
A personal guarantee is a promise you make to repay a business loan if your company defaults. It gives lenders a safety net — if your business can’t pay, they can go after your personal assets.
Most lenders require one, especially for:
New or small businesses
Loans with higher risk
Unsecured loans with no collateral
Why lenders use them: It lowers their risk. If the business fails, they still have a way to recoup their money.
Yes — but they’re not common. Lenders view these loans as riskier, so they typically reserve them for businesses that are:
Established (2+ years in business)
Highly profitable with strong cash flow
Offering valuable collateral
Borrowing smaller amounts or using alternative financing
Even then, these loans often come with higher interest rates, shorter terms, or stricter requirements.
While traditional bank loans almost always require a PG, several funding options may not:
1. Business Lines of Credit (Secured)
Some secured lines of credit use business assets (like receivables or inventory) as collateral instead of requiring a personal guarantee.
2. Invoice Financing / Factoring
Lenders advance cash based on unpaid invoices. Because repayment comes from your customers — not you — many providers don’t require a personal guarantee.
3. Equipment Financing
The equipment itself often serves as collateral. If you default, the lender repossesses the asset rather than coming after you personally.
4. Venture Debt
If you’ve raised venture capital, some lenders will offer non-PG debt based on your company’s valuation and growth.
5. Merchant Cash Advances (MCAs)
MCAs provide upfront capital in exchange for a percentage of future sales. They’re high-cost but usually don’t require a personal guarantee.
6. Corporate Credit Cards
Some business credit cards are issued solely in the company’s name — though they’re usually reserved for established, incorporated businesses with strong credit.
A loan without a personal guarantee can be a good choice if:
You want to limit personal risk and separate personal and business finances.
Your business is well-established and can qualify based on its own financials.
You have sufficient collateral to secure the loan without a PG.
However, for most small businesses — especially newer ones — a personal guarantee is often unavoidable.
| Pros | Cons |
|---|---|
| Protects your personal assets | Harder to qualify for |
| Fully separates personal and business liability | Often higher interest rates |
| Offers peace of mind if the business struggles | Lower loan amounts |
| Builds business credit independently | May require significant collateral |
Build strong business credit separate from personal credit
Show consistent revenue and profitability
Offer valuable collateral to reduce lender risk
Incorporate as an LLC or corporation (not a sole proprietorship)
Work with alternative or niche lenders open to no-PG products
Separate your business finances early: Open a dedicated business bank account and credit profile.
Pay vendors and creditors on time: This builds strong business credit history.
Use smaller loans first: Successfully repaying debt builds lender confidence.
Offer collateral: Business assets reduce lender risk and increase your chances of a no-PG offer.
It’s important to be realistic: most small business loans — including SBA, bank, and online loans — require a personal guarantee. It’s a standard part of lending, especially for startups and smaller companies without long financial histories.
But the more your business grows, the more leverage you have. Once you demonstrate profitability, build strong credit, and offer collateral, you’ll have more negotiating power — and potentially more no-PG options.
Fintech lenders are experimenting with cash flow-based underwriting, reducing reliance on PGs.
AI-driven risk assessment is making it easier for lenders to evaluate businesses without personal guarantees.
Revenue-based financing is expanding — offering capital without personal liability.
While small business loans with no personal guarantee do exist, they’re not the norm — especially for newer or smaller companies. Lenders want reassurance that they’ll be repaid, and a PG provides that.
The best strategy is to treat a PG as temporary. Use it to secure early funding, build credit, and grow your business. As your financials strengthen, you’ll gain access to more flexible financing — and eventually, you may be able to borrow without putting your personal assets on the line.