Does the SBA accept cosigners on business loans?

No. The SBA doesn't allow cosigners on its business loans. Instead, it requires personal guarantees from anyone who owns 20% or more of the business. A personal guarantee makes each eligible owner personally responsible for repayment if the business can't pay.

Can you use an LLC as a cosigner for a business loan?

No. Lenders require cosigners to be individuals, not business entities. A cosigner must be someone who can take on personal legal and financial responsibility if the borrower defaults, which an LLC cannot do.

What happens if I default on a business loan with a cosigner?

If you default, the lender can require your cosigner to repay the outstanding balance. Both of you may see negative impacts on your credit reports, which can affect your ability to borrow in the future. A default can also strain your personal relationship with the cosigner.

What are the risks of cosigning a loan?

Cosigners take on full responsibility for the loan if the primary borrower misses payments or defaults. This arrangement can lead to financial strain, damage to the cosigner's credit score and difficulty qualifying for future credit. If the loan is secured, any collateral tied to the loan — including the cosigner's assets — may be at risk.

Can a cosigner be removed from a business loan?

No. Cosigners typically can't be removed from a business loan. While some personal loans offer cosigner release programs, this option is rare for business financing. To remove a cosigner, you'd generally need to pay off the loan or refinance it in your name only.

Chris Lilly

Head of publishing

Chris Lilly is a personal finance expert and specialises in helping UK consumers untangle the features and costs of a range of financial products. Having started out with the Press Association, Chris initially joined Finder to focus on credit cards and personal loans.

Expertise

Loans & credit cards
Building credit
Financial health
Share trading

Experience

Author of over 500 articles on personal and business finance
Featured in leading publications including the Metro and Express
Interviewed key stakeholders in the lending industry, including Klarna’s senior commercial director, Russ Carroll, and Julia McColl, commercial director at Chetwood Financial

Education

Drawing & Applied Arts | University of the West of England
Foundation Diploma in Art & Design | Falmouth College of Arts

Featured publications

Industry insights from Chris Lilly

We asked Chris to share some insights on what’s shaking up the world of personal finance.

Are Brits getting savvier about their credit records?

It’s becoming more common to take control of your credit – getting to know what’s in your credit file and tracking your score from month to month. Consumers don’t expect to have to pay for this privilege, and thankfully they don’t have to.

How is Open Banking reshaping consumer lending?

Open Banking means borrowers can connect their bank accounts to finance apps, which can make it easier to demonstrate that they’re responsible with their money and would be able to afford credit. It’s also allowed innovative lenders to proactively suggest cheaper lines of credit which would save consumers money compared with expensive alternatives like overdrafts.

What is the new face of short-term borrowing?

While Wonga and many of its peers were biting the dust, some innovative fintechs started exploring new ways to help consumers bridge financial shortfalls, without it costing an arm and a leg. Salary advance services like Neyber and Salary Finance are looking at unlocking earned wages (so you don’t always have to wait until the end of the month), buy now, pay later services are letting shoppers spread payments, and innovative credit line services like Creditspring help consumers prepare for a rainy day with a more insurance-like approach.