Getting a business line of credit (LOC) to run or grow a business can be difficult to qualify for and often requires a personal guarantee from the owner. Personal guarantees help mitigate the risk for lenders but put the business owner in a more precarious position. However, you can still get funding for your business without a personal guarantee if your business meets other eligibility requirements.
These lenders offer LOCs and may not require a personal guarantee, but you may need to meet alternative criteria.
| Lender | Loan amounts | Loan terms | Basic requirements | |
|---|---|---|---|---|
| American Express | $2,000 to $250,000 | 6, 12, 18 or 24 months | 1 year in business, valid business checking account | |
| Lendio | $1,000 to $250,000 | 6 to 18 months | 6 months in business, $50,000 in annual revenue, 600 credit score | |
| Kapitus | $10,000 to $250,000 | 36 months | 2+ years in business, $180,000 in annual revenue, 650 FICO score | |
| Clarify Capital | Up to $5 million | 6 to 18 months | 6 months in business, $10,000 monthly revenue, 550 credit score, business bank account | |
| 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 | |
| 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 | |
| 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 18 months | 2 years in business, $15,000 in monthly revenue, 650 credit score, no sole proprietorships or nonprofits |
A personal guarantee on a business loan means you agree to take personal responsibility for your company’s debt if the business can’t repay it. If you sign a personal guarantee and your company defaults on the loan, the lender requires you to pay it out of your own pocket. If you don’t, it may go after your personal assets, such as your house, car or other property.
Depending on your business and the lender, you may be required to sign either a limited guarantee or an unlimited personal guarantee. Just like it sounds, an unlimited guarantee means you’re personally held responsible for the entire outstanding debt. A limited guarantee means you’re only responsible for a portion of the debt.
If you’re the sole owner of a business, you’ll most likely be required to sign an unlimited personal guarantee. For example, if your company ran up $50,000 on a line of credit and can’t repay it, you’ll have to come up with the full $50,000. If you have partners, you may each sign a limited personal guarantee for a percentage of 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 source.
A personal guarantee is typically required if you’re a newer business, haven’t established business credit or don’t have strong financials. Since these situations are riskier for the lender, collateral ensures the lender is still repaid through personal assets even if the business defaults.
In general, 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 to get 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.”
It can be tough to meet the requirements for a business LOC without a personal guarantee, but there are other options.
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 LOCs with no personal guarantees.
Yes. Most business loan lenders check borrowers’ credit scores as part of the application process. This is typically true even if you’re not signing a personal guarantee. Because it’s your business, lenders usually want to see you’ve been responsible for 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. 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 permission from you before they do a hard pull, so it won’t happen without your authorization.
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