Why is a personal guaranty needed if SBA provides a 75% guaranty to the lender?

I've gotten this question several times recently so I figured we can discuss it. Even though the SBA provides the bank with a 75% guarantee, it doesn’t mean the bank (or the SBA) is taking on all of the risk. Here’s why a personal guaranty is still required: *It shows commitment. By personally guaranteeing the loan, you’re showing both the bank and the SBA that you’re fully invested in making the business succeed. *It keeps everyone accountable. If borrowers could just walk away without any responsibility, it would create a lot of risk. The guaranty makes sure we’re all aligned. *It’s part of SBA rules. Before the SBA pays the guarantee to the bank, the lender has to show that all efforts were made to collect on the loan including the personal guaranty. So, the guaranty isn’t about expecting things to go wrong it’s about making sure you’re personally connected to the success of your business.