Good question. Perhaps someone with legal asset protection experience can take a look at it. I'd be interested to learn about it as well. Maybe someone can tag the right people here.

I'm not a lawyer, but pay off your house if take a PG bc they can't take it off you declare bankruptcy. Many developers have PG's. I'm not saying I endorse them but for a small business, it's difficult to get around unless you get someone that believes in you and will sign a PG.

I’ve heard of some people offering PG insurance but I haven’t seen it from well known agencies yet.

I am under the impression that if you have less than a certain % of equity in your home, the SBA will not attach your personal home. You might want to talk to an SBA lender for more details but if you do have a lot of equity, you could get a home equity line of credit (HELOC) in advance and draw on it to 'use' that equity. You may also be able to 'season' that draw for a few months and use it as part of your equity injection. Again, best to speak with some of the great SBA lenders on here like ^[redacted]‌ and ^[redacted]‌ for the most accurate answers specific to your situation.

Avoiding PG under an SBA is impossible. Need to go with direct lenders (loan to own types) at higher rates who would agree to only collateralize the business assets and work hard to make sure the business does not fold. If it does, your down payment is gone but not the personal assets. As business takes off, refinance or once you get confidence it is a viable business, bring in the SBA funding and get rid of direct lenders.

Personal guarantees should be avoided wherever possible. Only do it if you must. Look for non-SBA sources first, even if it means more equity down. Some banks will allow you to limit the PG to exclude certain assets - definitely try this but most will say 'no'. I think the personal guarantee is unethical and bad for business but I know lenders adore them. Taking someone's house because covid (or some other disaster) ruined their business is unconscionable in my view, and very bad for free enterprise. The very idea of limited liability companies was to allow business to take risk necessary to flourish but PGs disrupt this. PG insurance was tried in the US but failed due to poor execution. They offer it in the UK. There is tremendous demand in the US - can't believe it is not offered; borrowers would pay a fortune for it.

If anyone has avoided this, I would love to know how. Much easier when business is greater than 2M in EBITDA.

There is no way to avoid a PG if funding through the SBA.

PG is required on SBA. If you have greater than 25% equity the lender has to take your house per SBA rules. A few thoughts: 1. Hone equity loans are included in the calculus 2. Anything done to your house will have a 90 day look back. 3. Pay attention to the title, not your mortgage. If you Aren’t on the title then we don’t have to take the house

Depending on states your home may be protected under bankruptcy law. for example in Texas the homestead is absolutely protected

Igor, really depends on the ownership of the trust... Who has control and who can sign. Feel free to email me to discuss [redacted] We can run some scenarios.

There is such a thing as PG insurance. I know little about it.