If you raise money through SBA loan, it will come with a Personal Guarantee. If you want conventional loan without PG, then it is likely need to be a larger acquisition with around $2M+ of EBITDA and the bank will likely look at who are the equity investors for more comfort. Copying ^[redacted]‌ with Live Oak Bank to share her thoughts.

Banks may provide "non-recourse" debt depending on the quality of the assets pledged as collateral, without you having to sign a personal guarantee. However, the advance rates are lower than what you'll get if you sign a personal guarantee (50% or 60% max). Regarding loan amounts, it depends on the bank but I've come accross smaller banks that do look at non recourse deals even if the target acquisition has EBITDA below 500k

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Unfortunately,, unless the deal involves real estate, I have yet to hear of any lender offering non-recourse on loans just using a blanket lien on assets as collateral. However, we do have a program which can help business owners build business credit with no personal guarantee even on a brand new entity, but it is a marathon not a sprint in the process. Feel free to inbox me for more details.


Luke...thanks for reaching out with this!

As Adel mentioned, seems there's no way around the personal guarantee if you borrow under SBA 7(a).

Understand the reticence to take on the PG, but worth thinking about are the benefits of the SBA program - especially (IMO) a lack of maintenance covenants, lower rates, and potential for higher overall leverage ratios. What I've seen some do is get into the business under a loan with personal guarantee and, all things going well, recap to a different product without a PG within a few years.

There used to be PG insurance in the US. They still have it in the UK. Some searchfunders were working on a new product recently, not sure if they got a result. Huge gap in the market here for insurers. Purchasers would pay huge fees to avoid PG liability.

The main question is the value of a business without the owner. The reason middle market businesses (i.e. $5MM+ in ebitda) Don’t often require PGs is because the business is large enough to have value. Most small businesses need an owner at the helm or they start to deteriorate quickly. So most small businesses will require a PG, especially on a cash flow basis. There are options out there for no PGs but the costs traditionally make them unattractive