Most business loans, especially more traditional ones, require a personal guarantee. It lowers the risk for the lender if your business can’t repay the loan. It can also make it easier to qualify for a loan and may help you secure more competitive rates and terms. But if you have strong business financials, good credit or collateral to offer, you may be able to forgo the requirement.
Best business loans with no personal guarantee
Check out our top picks of lenders that may not require a personal guarantee if you check other boxes.
Finder’s business loan experts analyzed dozens of lenders offering loans that may not require a personal guarantee. We ultimately chose lenders with competitive rates, fast funding, flexible loan terms and a variety of loan types.
Some of the criteria we used to evaluate lenders include:
Interest rates
Fees
Loan amounts
Loan terms
Repayment plans
Turnaround times
Credit score requirements
Time in business requirements
Revenue requirements
Reputation of the lender
How to compare business loans with no personal guarantee
Aside from looking for loans that don’t require a personal guarantee, consider these factors when choosing a business loan lender.
Rates. Rates between lenders vary widely so be sure to explore the best deals on business loans. And keep in mind that you may pay higher rates when a personal guarantee isn’t required.
Additional fees. Depending on the lender and loan type, you may be charged fees on top of interest, which adds to the loan’s cost.
Turnaround times. Online lenders often have relatively quick funding — some as soon as the same day — but other options may take a little longer. No doc loans tend to offer the quickest turnaround since they typically use technology to streamline the application process.
Loan terms. Loan terms vary significantly depending on the loan type — which affects how often and how large your payments are — so be sure to assess your budget to make sure you can manage the repayment schedule.
Lender requirements. Business lenders that offer loans without a personal guarantee may have more strict requirements to qualify. Research the credit score, revenue, time in business and other requirements to make sure you at least meet the minimum criteria.
Hot tip
Always run the numbers for total cost, including fees and repayment schedule. The cheaper no-PG loan might cost more in the long run if the terms aren’t manageable.
What is a business loan with no personal guarantee and how does it work?
A business loan with no personal guarantee is basically the same as any other type of business loan — it just doesn’t require that you agree to repay the loan out of your personal assets. In other words, if your business can’t make its loan payments, the lender can’t require business owners to repay the loan themselves.
In general, most business lenders require owners with at least a 20% stake in the company to sign a personal guarantee as part of the loan contract. It’s essentially a risk-reducing measure, so if the business defaults, the lender has another way to get its money back. A personal guarantee on a business loan can also make it easier to get approved and qualify for better rates and terms.
Pros and cons of business loans with no personal guarantee
Consider the benefits and drawbacks of getting a loan that doesn’t require a personal guarantee.
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How we picked these
What is the Finder Score?
The Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
Retail businesses or others that have a lot of credit card sales
How to qualify for business loans with no personal guarantee
Business lenders typically look at your credit score, monthly or annual revenue and how long you’ve been in business. To get a loan without a personal guarantee, you’ll need to meet — if not exceed — these general business loan requirements:
Revenue. Most lenders want to see at least $10,000 in monthly revenue, but some may require more or less than that. Expect to need more than the minimum requirement to qualify for a business loan with no personal guarantee.
Credit score. Online lenders typically have more lenient credit requirements than banks, but most require at least 600 or more. However, if you want to forgo the personal guarantee, you may need a credit score over 700. Having good business credit is also a plus.
Time in business. In most cases, you’ll need to be in business for at least six months to a year to qualify for any type of business loan, but you may need more business experience to skip the personal guarantee requirement.
How to apply for personal loans with no guarantee
If you already have an existing relationship with a lender, you might make that your first stop when looking for a loan without a personal guarantee. Beyond that, doing your research and being prepared will help you obtain loan approval.
Determine your need. What is the purpose of the loan, and how much do you need to achieve your goals?
Assess your budget. Figure out how much you can afford by calculating loan payments and seeing if they fit into your budget.
Check your credit. Knowing your credit score before you apply will help steer you toward lenders that work with borrowers in your credit range. If you’re looking to skip a personal guarantee, knowing your business credit score is worthwhile as well.
Compare lenders. Consider interest rates, fees and loan terms from multiple lenders to find the best deal — keeping in mind you may have a smaller pool to work with. It’s also a good idea to research lender requirements to make sure you meet its minimum qualifications.
Gather your documents. Be prepared to submit tax returns, bank statements, profit and loss statements or other financial documents. Ask the lender for a list of required documents before you apply.
Apply. Once you’ve found the right lender, you can fill out the application and submit the required documents. You may want to talk to a loan specialist if you have questions or need any guidance on the application.
Review and sign. If approved, read over your loan agreement, paying attention to rates, fees and repayment terms before signing.
Hot tip
Because PG-free loans are harder to qualify for, preparation matters. Know your numbers, gather documents early and focus on lenders that already work with established, low-risk businesses.
Frequently asked questions
Can I get a business line of credit without a personal guarantee?
Yes, you may be able to qualify for a business line of credit with no personal guarantee with some lenders. However, you’ll need to meet or exceed the lender’s basic requirements to qualify, and you may pay higher rates and fees than borrowers willing to sign a guarantee.
Can I get a business credit card without a personal guarantee?
Possibly. While most major banks don’t issue business credit cards with no personal guarantee, there are a few options to consider. But they may be difficult to qualify for or have limited uses.
What should I do if I was denied a business loan?
If you were denied the loan, you can contact the lender to find out why. It’s possible you missed something on your application that triggered a denial, and there may be an easy fix. Or, you can discover what was lacking in your application and attempt to remedy it. For example, if you were denied because you have a lot of debt, you could offer collateral to secure the loan — or a personal guarantee.
Lacey Stark is a freelance personal finance writer for Finder, specializing
in banking, loans, investing, estate planning, and more. She has 20
years of experience writing and editing for magazines, newspapers, and
online publications. A word nerd from childhood, Lacey officially got her
start reporting on live sporting events and moved on to cover topics
such as construction, technology, and travel before finding her niche in
personal finance. Originally from New England, she received her
bachelor’s degree from the University of Denver and completed a
postgraduate journalism program at Metropolitan State University also
in Denver. She currently lives in Chicagoland with her dog Chunk and
likes to read and play golf.
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