If my LLC borrows the money, am I still personally on the hook?

Written by Kaz · Published 27 September 2026 · How figures are checked

Summary

Usually, yes. The LLC shields your house and savings from the company's creditors, but a personal guarantee is a separate promise you make to the lender, and it survives the shield. On SBA loans, anyone owning 20% or more generally has to guarantee, and the Federal Reserve found that 59% of small employer firms with debt had used a personal guarantee.

Two different promises

SBA's description of the LLC says that in most instances your vehicle, house, and savings "won't be at risk in case your LLC faces bankruptcy or lawsuits." That protection covers the company's own debts, the ones only the LLC signed for.

A guarantee is a contract between you and the lender. Sign one, and the lender can come to you if the LLC doesn't pay, no matter how the business is organized. The shield was never between you and that contract.

The 20% line on SBA loans

Under 13 CFR 120.160(a), "holders of at least a 20 percent ownership interest generally must guarantee the loan." The lender can also ask other people or entities for full or limited guarantees "without regard to the percentage of their ownership interests, if any."

In paperwork terms:

Ownership	SBA form	What it says
20% or more	Form 148, Unconditional Guarantee	Individuals at this level "must provide an unlimited personal guaranty"
Under 20%	Form 148-L, Limited Guarantee	Owners "may provide a limited or full guaranty," and the lender uses the form to set the limit

So in a two-member LLC split 50/50, both members fall in Form 148 territory. A 15% investor falls under the line but can still be asked to sign a limited one.

How common guarantees are

The Federal Reserve Banks' 2026 report on employer firms, drawn from 6,525 responses to the 2025 Small Business Credit Survey, found that "of firms that have debt, 59% used a personal guarantee to secure their debt, while 51% used business assets." Guarantees outnumbered business collateral, and the figure covers all lenders, not only SBA ones.

What the LLC does change

It changes the paperwork, not the promise. SBA's Form 1919 collects information about the applicant "and its owners," along with the loan request, so the owners are in the file from the first page. The IRS treats a one-member LLC as disregarded for income tax unless it elects otherwise, which means its income lands on the owner's own return, while an LLC with two or more members defaults to partnership status. A single-member LLC with employees needs an EIN, and the IRS notes that most new single-member LLCs will end up getting one; if a bank asks for an EIN to open an account, the LLC can apply for it.