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 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’ll need to meet alternative criteria.
| Lender | Loan amounts | Loan terms | Basic requirements | |
|---|---|---|---|---|
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 $25,000 | 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, $480,000 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 | |
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 |
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’ll 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 source.
A personal guarantee is typically required if you’re a newer business, haven’t established business credit or don’t have strong financials.
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 business loans that may not require a personal guarantee.
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.
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 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 permission from you before they do 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 more alternative types of financing, such as merchant cash advances or invoice factoring.
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