Glossary · People and paperwork
Unlimited liability
In short
A legal structure where an owner's personal assets are not protected from the business's debts and obligations. Creditors can pursue the owner's personal wealth.
What it means in a deal
This is a key risk factor for buyers, common in sole proprietorships and general partnerships. For an SBA 7(a) loan, you'll provide a Personal Guarantee regardless, but a business structure like an LLC or Corporation still offers protection against other business liabilities beyond the loan. Always consider structuring your acquisition to limit liability where possible.
Related terms
Common questions about Unlimited liability
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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