Is a personal guarantee required for a business loan?

Written by

Alex Morgan · Head of Credit

Reviewed by

Betty Francis · Chief Compliance Officer

Last reviewed

June 12, 2026

Short Answer

Yes, for nearly all commercial loans under $5M. Any owner with 20% or more equity must personally guarantee an SBA loan. Inflection Financing conventional loans also require PG.

Detail

A personal guarantee makes the principal personally liable for the debt if the business cannot pay. SBA requires PG from any owner with 20%+ equity. Conventional lenders almost universally require PG for loans under $5M. The PG is not collateral — it does not pledge specific assets — but it does allow the lender to pursue personal recovery if the business defaults. The only way to avoid PG is to qualify for asset-based, non-recourse, or large CRE financing — typically only available at $10M+ deal sizes.

Key facts

SBA: PG required for 20%+ owners
Conventional under $5M: PG nearly always required
Non-recourse CRE: typically $10M+ only
PG is unsecured personal liability, not pledged collateral

Ready to deploy capital?

Apply in under 10 minutes. Decisions in 24 hours. No broker fees. Direct lender.

Apply Now Run Calculator