Glossary · People and paperwork
Personal liability
In short
The legal obligation of an individual for business debts and actions, meaning their personal assets can be seized to satisfy those obligations. This is a primary concern for business owners.
What it means in a deal
As an SBA 7(a) borrower, you'll sign a Personal Guarantee, making you personally liable for the loan. Beyond the loan, your choice of entity (LLC, Corporation) can limit other business liabilities to the business's assets. Understand where your personal assets are exposed and ensure the business structure aligns with your risk tolerance.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
SBA Form 1919 — Borrower Information Form
U.S. Small Business Administration · SBA form
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Personal liability
- Does a personal guaranty extend to my personal assets acquired after the loan closing date?
- What happens if a required personal guarantor lacks sufficient personal assets for an effective guaranty?
- Can personal funds borrowed from a credit union against personal assets count towards my equity injection?
- What personal risks do I take with a personal guaranty on an SBA 7(a) loan?
- What is the specific personal net worth threshold that triggers a personal guaranty requirement for an owner?
- Can funds from a personal line of credit secured by non-personal real estate be equity injection?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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