Glossary · People and paperwork
Personal obligation
In short
A personal obligation is a debt or responsibility for which you are individually liable, typically through a personal guarantee. This means your personal assets are at risk if the business defaults.
What it means in a deal
For nearly all SBA 7(a) loans, anyone owning 20% or more of the business must sign an unlimited personal guarantee. This creates a personal obligation, meaning the lender can pursue your personal assets (like your home or savings) if the business loan defaults and collateral isn't sufficient. Understand this risk fully before signing.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Personal obligation
- What happens to my personal guaranty obligation if I later sell the business?
- If I sell the business, does the new owner inherit the prepayment penalty obligation for the SBA loan?
- 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?
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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