It is possible to get a line of credit without a personal guarantee. A personal guarantee is a promise to pay back any debts with one's personal assets in the event of default. While most traditional lenders require this, many alternative lenders, such as online lenders, don't have requirements that are as strict.
Business Line of Credit - No Personal Guarantee FAQs
A business line of credit without personal guarantee is a type of financing that provides businesses with access to capital with no requirement for the owners or officers to personally guarantee repayment.
This type of funding works by offering businesses access to financing up to an approved amount, which they can draw from as needed, and repay over time with no need for a personal financial guarantee from the borrower.
Businesses that are in good standing and have been operating for at least two years typically qualify for this type of financing. The lender will assess the business's financial position as well as its credit history to determine eligibility.
The borrower can draw from their approved line of credit amount and repay it in small increments over time, or in one lump sum when convenient. The payments are typically due on a monthly basis and can be paid online or via checks sent through the mail.
Yes, lenders may charge setup fees and annual maintenance fees for this type of financing, as well as additional interest on late payments. It’s important to read all terms and conditions carefully before signing up for a business line of credit without personal guarantee.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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