But here’s the part most people don’t realize: That guarantee is what makes banks actually able to lend to small businesses in the first place.

Keep in mind —lenders aren’t investors. They don’t get equity. They’re not sharing in your upside.

And they’re required by law to protect the money that all of us deposit in our bank accounts, which is the same money they’re lending out to businesses.

So the personal guarantee is one of the ways the lender reduces their risk enough to approve the loan.

Now, if the idea of a personal guarantee makes you stop and hesitate, that’s a normal, common-sense reaction.

So, take your time making that decision. Talk to your accountant, your financial advisor, or your attorney. Get good advice so you can make a smart decision.

And, if you decide you’re just not comfortable signing a personal guarantee, that doesn’t necessarily mean you can’t get business funding. It just means you may want to look at other ways to finance your business that don’t require a loan.

If you want a list of 45 ways to fund your small business without using a business loan, send us a message, using the contact button at the bottom of our screen, and we’ll share it with you.

And, if you have any questions related to personal guarantees or small business loans, let us know, and we’d be happy to answer them.