The Personal Guarantee: 5 Ways Small Business Owners Can Reduce Their Liability

​Small businesses make a huge contribution to the U.S. economy. Nevertheless, starting a new business is risky. Lenders view loans to small businesses, particularly start-ups, as among the riskiest they make, particularly when there is little or no credit history or business revenue on which to base their decision. In an effort to lessen their risk, lenders frequently require small business owners to sign personal guarantees as a condition for giving the loan.  A personal guarantee is a legal commitment by a business owner to repay a business debt if the business is unable to repay it. These guarantees put the personal assets of small business owners on the line—savings accounts, cars, homes, and retirement funds. However, there are several steps you can take to minimize your liability.

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