Are You Personally Liable for a Business Loan?

If you are in a sole proprietorship or a general partnership, you will most likely be personally liable for a loan taken out by the business. If the loan is taken out by a business that is set up and properly run as a corporation or LLC, then the owners of the business should not be personally liable for the loan. Note, however, that banks or other lenders may insist that the owners of a business personally guarantee the loan to ensure that its payment. Avoid personal guarantees if at all possible.