When applying for a business line of credit (LOC), a personal guarantee helps mitigate the risk for the lender but puts the business owner in a riskier position. However, you can still get funding for your business without a personal guarantee if your business meets alternative eligibility requirements.
These lenders offer LOCs and may not require a personal guarantee, but you’ll need to meet other criteria.
| Lender | Loan amounts | Loan terms | Basic requirements | |
|---|---|---|---|---|
| Lendzi | $2,000 to $250,000 | 6 to 12 months | 6 months in business, $50k+ in annual revenue, credit score requirements vary | |
| Lendio | $1,000 to $500,000 | 6 to 18 months | 6 months in business, $50,000 in annual revenue, 600 credit score | |
| Fundera | $1,000 to $750,000 | 6 to 24 months | 6 months to 1 year in business, 600 credit score, $50,000 to $100,000 annual revenue | |
| Rapid Finance | $5,000 to $250,000 | 3 to 18 months | Valid ID, business bank account, last three months of business bank statements | |
| National Business Capital | $100,000 to $10 million | Not stated | 1 year in business, $500,000 annual revenue | |
| Chase | $10,000 to $500,000 | Up to 5 years | Not stated | |
| OnDeck | $6,000 to $100,000 | 12, 18 or 24 months | 1 year in business, 625 FICO score, $100,000 in annual revenues, business checking account | |
| Bluevine | Up to $250,000 | Up to 12 months | 1 year in business, corporation or LLC, 625 FICO score, $120,000 in annual revenue, no bankruptcies | |
| Idea Financial | Up to $275,000 | Up to 36 months | 2 years in business, $15,000 in monthly revenue, 650 credit score, no sole proprietorships or nonprofits | |
| Fundible | Up to $250,000 | Up to 24 months | 6+ months in business, 500+ credit score, $8,000 average monthly revenue, 3 most recent bank statements | |
| Kapitus | $10,000 to $250,000 | 36 months | 2+ years in business, $180,000 in annual revenue, 650 FICO score | |
| Backd | $10,000 to $750,000 | 6 or 12 months | 1 year in business, 600 FICO score, $300,000 annual revenue, business bank account, US-based business | |
| Clarify Capital | Up to $5 million | 6 to 18 months | 6 months in business, $10,000 monthly revenue, 550 credit score, business bank account | |
| Truist | Up to $250,000 | 12 to 60 months | Not disclosed | |
| PNC Bank | $100,000+ | Revolving | Not disclosed | |
| Wells Fargo | $100,000 to $1 million | Up to 3 years | $2 million to $10 million in annual revenue, at least 2 years in business, have business assets to secure the loan | |
| Bank of America | $25,000+ | Revolving with annual renewal | 2 years in business, $250,000 in annual revenue |
A personal guarantee on a business loan means you’re personally responsible for repaying the debt if your company can’t. If your business defaults, the lender can require you to pay and may pursue your personal assets, like your house or car, if you don’t.
Lenders may require either a limited or unlimited personal guarantee. An unlimited guarantee holds you responsible for the entire debt, while a limited guarantee only covers a portion of the debt.
Sole business owners often sign an unlimited guarantee, meaning if you took out a $50,000 loan, you’d be required to repay it all. Partners might each sign limited guarantees, sharing responsibility for the debt.
If you qualify for a business line of credit without a personal guarantee, it’s important to consider the pros and cons of this kind of funding.
A personal guarantee is typically required if you haven’t established business credit or don’t have strong financials. It can be tough to qualify for a business line of credit without a personal guarantee, but it’s not impossible. You’ll likely need to meet other fairly strict requirements, which can vary by lender.
“It really depends on the lender,” says Joseph Camberato, CEO at National Business Capital. “Some will ask for collateral, while others won’t. If you don’t have collateral, most lenders will want you to have been in business for a couple of years, show good cash flow management and have a decent personal credit score — usually around 650 or higher. The better your score, the better your chances.”
You may also need a strong business credit profile to avoid signing a personal guarantee for an LOC, adds Michael Baynes, cofounder and CEO at Clarify Capital.
“Having established business credit is important. Lenders use your company credit profile to determine your trustworthiness in the absence of a personal guarantee. This includes a positive payment history with vendors, suppliers and other creditors.”
In some cases, you may qualify for a business line of credit without a personal guarantee, business credit or collateral, but the terms may not be as favorable.
“Although uncommon, it is conceivable,” says Baynes. “Some lenders provide unsecured business lines of credit based on the overall viability of the company. These often offer higher interest rates and smaller credit limits.”
A personal guarantee might help you secure the funding necessary to keep your business running, but it could put your personal finances at risk, especially if the business fails. Here are a few of the biggest consequences you’ll face if that occurs:
When you consider how much damage a personal guarantee could do to your personal finances, it makes sense to look for ways around it. While not all lenders are willing to budge on personal guarantees, these strategies can improve your chances of getting approved without one.
It can be tough to meet the requirements for a business line of credit without a personal guarantee, especially if your business is newer or hasn’t built strong credit yet. But that doesn’t mean you’re out of options. Here are some types of business financing that might work for you:
Qualifying for a business line of credit with no personal guarantee is challenging, but it can be done. It’s easier for well-established companies with good business credit. But if you have strong financials or collateral, even newer businesses may qualify for a no pg business line of credit.
Most business loan lenders check borrowers’ credit scores as part of the application process, even if you’re not signing a personal guarantee. Because it’s your business, lenders usually want to see that you’ve been responsible with both personal and professional debt.
To get a business line of credit, you’ll most likely need a credit score of at least 600 to qualify, although a few lenders accept lower scores or offer LOCs with instant approval. However, credit scores of at least 700 or more are needed to qualify for the best rates and loan terms.
It depends on the lender. Some only do a soft inquiry to check your score before the actual application process, while others may conduct a full hard inquiry to dig deeper into your credit profile. However, lenders are required to get your permission before doing a hard pull, so it won’t happen without your authorization.
You may be able to get a business loan without a personal guarantee, but you’ll typically need to have a well-established company with good business credit and strong financials. Or, you may be able to qualify for alternative types of financing, such as merchant cash advances or invoice factoring.
You can get a business line of credit without a personal guarantee from certain lenders that focus on revenue or collateral instead of your personal finances. The easiest way to find these companies is by using a loan marketplace like Lendio or Clarify Capital. Marketplaces work with a network of lenders, including those that offer no pg options, and can help match you with the ones that fit your eligibility.
Yes, it is possible to build business credit without relying on your personal credit. Here’s what you need to do:
Keep in mind that lenders may still check your personal credit score when you apply for a loan, especially if your business is relatively new.
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