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In this video, I will show you how you, as a business owner, can get an unsecured loan with no personal guarantee and the best places and the best lenders you can go to, to get those unsecured loans for your business.

Hey everybody, welcome to my channel. I am your host, Leo Landaverde. I’m a business coach and outsource CFO, helping you scale your business. If you’re ready to grow your business to seven figures and beyond, while creating the financial freedom and the lifestyle that you want, then subscribe to this channel and don’t forget to hit the bell and you’ll be notified every time a new video comes out.

Everybody, this is Leo Landaverde with Greenland Advisors. Creating more profit, more value, more freedom for your business. So today we’re talking about business loans where there is no personal guarantee. And we’re starting with, what is a personal guarantee? There’s a lot of misconception out there as far as what personal guarantees are. A personal guarantee, also called a joint and several liability, essentially makes you a co-signer to your business on your loan. If your company can’t pay off the debt, then you’re legally liable for making payments. And if you can’t do that, then the lender can legally claim your personal assets such as your home, car and investments for repayments.

So here’s something that you need to know as a business owner. Whenever you can, you’ve got to stay away from a personal guarantee because in doing so you are being a co-signer with your business, as I said earlier. And a lot of business owners go, not fully understanding, and they just sign everything on the small print. With everything nowadays with DocuSign, a lot of my clients, I ask them to actually download the documents, review them with their attorney, making sure that what you’re signing, you can live with. A lot of them don’t really read the fine print and when it says that a personal guarantee, joint and several, as we talked about, can actually force you to declare bankruptcy if you’re not able. Usually what happens a lot of businesses, they end up with no choice about personal bankruptcy.

Why lenders require a personal guarantee? Small business lending is risky. Think about it. Well, the whole definition of being an entrepreneur is someone who takes a risk. The word entrepreneur means, taking a risk for the potential profit. So it’s inherently risky. And the mortality rate of businesses is way too high for lenders not to pay attention to that. So as a result, most business lenders have minimum requirements for revenue and the type of business, plus collateral. With unsecured loans, however, the lender needs some form of certainty that he will get his money back if your business doesn’t work out. The certainty comes in the form of personal guarantees, which is really the topic of today’s video.

So keep in mind too that if businesses are structured to limit your liability, that doesn’t apply to your personal guarantee. You could have a limited liability company. You can have a professional corporation. You can have a C Corporation, you can have a small S Corporation, but the minute you tie yourself in personally, all goes out the window. So the piercing of your corporate veil doesn’t really protect you once you personally guarantee something. So I’m going to go through some examples of what some of the popular lenders out there are today. And then we’ll kind of end up looking at which ones makes most sense at different stages of business.

So there’s Kabbage. Very, very popular with a lot of young business owners. They really made a dent in the market. You have OnDeck, who’s been around for a few years. They’re in what I call the FinTech Industry. A lot of them are backed by venture capital in which, they really look at this as a great business venture because there’s a hole in the market. As you know, most businesses are turned away by banks, probably higher than 60% of all business applications get turned down by banks. So there’s a marketplace for these types of loans. Now you’ve heard of a company called StreetShares. They have really gone out there to really make an effort themselves, and you’ll see the twists and how they’re able to do that and why that may make good sense for you. There is BlueVine. If you work with… They were one of the early adopters of working with QuickBooks. If you have QuickBooks Online or QuickBooks Desktop, you’ve noticed, particularly online, where they’re really pushing BlueVine. And also Fundbox. These two are very much connected with QuickBooks Online and they make it very easily and very convenient for you, with one press of a button they can actually gather all your data, and you’re giving them permission to look at all your financial transactions and they can gauge how much they can lend you, but that comes at a cost.

So this is what it looks like and this is what I want you to pay attention to. This grid, this matrix kind of tells you the different… The five lenders that are specifically geared to the kind of up and coming, the young, small businesses.

So Kabbage, you have to have been eligibility one year in business, you have to have $50,000 in annual revenue, which it doesn’t really take much, right? No credit score requirement. You can get loans from anything from $2,000 to $250,000. So it’s a pretty wide gap. And the cost and repayment terms is either 1.5% to 10% per month on either six, 12 or 18 months. See, you’ve got to go in it with eyes wide open. It can be very, very expensive. At a run rate of 10% per month, it’s 120% APR per year. And they do require a personal guarantee. So if you want a business loan with no personal guarantee, this isn’t it.

OnDeck. One year in business history, with $100,000 in revenue. So they are a little higher, twice the minimum requirement from Kabbage and you do have to have a 600 credit score. Now it makes sense because OnDeck has been in the business a little longer so they’ve probably been burned a few times. And Kabbage is more of an up and coming. You can get anything from $5,000 to half a million dollars of working capital for your business. The rates are anything from 10% to 79%. And yeah, if you’re wondering, that is annual and yes, that is outrageous, but is clearly legitimate because there’s a need for it. And you can get loans, repayment terms from anywhere from three to 36 months, and they will require, not only do you have to pay the 79% APR, you will have to personally guarantee and they will put a lien, which is called a Universal Commercial Code filing, which is basically a blanket security on your business. Your business will secure it, and you’re personally guaranteeing it. You decide.

StreetShares. Six months in business. $25,000 in annual revenue and 600 FICO score. Two to 250,000. As little as 6.5% to 39% APR. That sounds a lot better than OnDeck and Kabbage. And here is the thing I like about it. Personal guarantee and liens for lines of credit and larger loans. So for this loan, if you’re looking for the loan that is between two and $250,000, so long as you have a FICO score of 600 and $25,000 in annual revenue, you do not have to personally guarantee it. So they get an endorsement from me.

BlueVine. BlueVine and Fundbox are both connected to QuickBooks. You have to have been in business for six months, $100,000 in annual revenue, or basically at a run rate of about $8,300 a month, and a FICO score of 600. You can get up to $250,000. The rates are a little better than OnDeck and Kabbage, but not better than StreetShares. You can get repayment terms for up to 12 months and you will have to personally guarantee it and they will put a lien on your business. A UCC-1.

Fundbox, last but not least. Three months in business, $25,000 in annual revenue with a 500 FICO score, which is not very much. You can get up to $100,000. It starts at 4.66 APR. You see here, and you can get a repayment up to 24 weeks. Now they have a very aggressive repayment method and there is a personal guarantee on higher credit scores.

So no personal guarantee for StreetShares and no personal guarantee for Fundbox. So if you want a business loan with no personal guarantee you know which you should choose. Now, as in everything, you got to look at, lenders are constantly re-doing their agreements. Every once in a while you get a revised agreement, you got to look at those because if, say you got a loan from StreetShares today and you repaid it in six months, and then you decide to borrow again, they may have changed their requirements and they will end up using a personal guarantee. Particularly if you’re getting lines of credit. For lines of credit, most lenders would require some type of personal guarantee because it’s more convenient for the lender to deploy all the capital once, rather than you having the luxury of using the funds whenever you need to. There’s a whole other video where I discuss business loans versus credit lines of credit, that you should actually watch. So let me know if this was helpful to you and if it will help you with your decision making process.

Please comment below and let me know which of these lenders you’re most comfortable with and you would apply today. Also, if you want to join a community of like-minded successful entrepreneurs, just like you, then join our Facebook group at the link below, where I share tips, tactics, and strategies on how my clients are growing their businesses to seven figures and beyond.

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