No personal guarantee business loans: What you need to know

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If you’re looking for no personal guarantee business loans, you might relate to the following difficulties: 

  • While personal guarantees are standard in business financing, it means your personal assets – like your home – are on the line. You might have had a bad experience with personal guarantees in the past.
  • You likely want to know if you’ll require a personal guarantee upfront, instead of going through a loan application first.
  • There aren’t many lenders that offer loans without a personal guarantee in Ireland. 
  • You might want to tender for a new contract, but you need to know you have the funding available to deliver. Ideally, you want a business loan that doesn’t require a personal guarantee and will still give you enough funding. 
  • You want to avoid getting locked into a traditional bank loan that may not suit your business in a few months.

This article will look at what a no personal guarantee business loan is, plus some alternatives that might work better for your business. We’ll cover:

To speak to the team about our funding options – all of which don’t require a personal guaranteereach out to us today. 

How to get a no personal guarantee business loan

A no personal guarantee loan means you don’t need to use any personal assets such as your home or car as collateral. 

Personal guarantees are often the standard in business financing, so finding an appropriate loan option can be difficult – especially if you’re a new business or a start-up.

If a lender does offer you a loan without a personal guarantee, they might offer you a smaller amount of funding than you’d like and potentially higher interest rates. This is because the lender’s perceived risk is higher as they don’t have any of your assets as security.

However, this type of loan agreement can have a serious impact on a small business owner’s life. When you use your own assets as collateral for a loan agreement, you’re introducing something personal into your business life. This means that if you’re unable to repay the loan, your personal items and relationships – which ought to be separate from your business assets – are impacted. 

If you’re researching this topic, you might have already tried talking to your bank to see if you’re eligible for a no personal guarantee business loan. If you were, chances are you would have been offered less financing than you’d like. Frustratingly, it can be difficult to tell if you’ll be required to give a personal guarantee before you go through the application process.

At Financefair, we don’t offer traditional business loans, but we do offer several finance options that may be a better fit for your business. We’ve included information on those solutions in this table, alongside the main providers of secured and unsecured business loans in Ireland: 

Financefair Bank of Ireland¹ AIB² PTSB³ Linked Finance Grid Santiago
Personal guarantee required? No May be required No information on website No information on website Yes No information on website No information on website
Minimum finance amount €50,000 for line of credit and selective invoice financing €1,000 No information on website  €5,000 €10,000 €10,000 €10,000
Maximum finance amount €1,000,000 for revenue based finance and invoice discounting For loans over €120,000, speak to your relationship manager For loans over €300,000, speak to your relationship manager No information on website €500,000 €500,000 €500,000
Terms Flexible: depends on funding solution.  Unsecured loan terms of up to 7 years, secured loan terms not on website No information on website Up to 10 years Up to 5 years Up to 12 months No information on website
Can you apply online? Yes You can apply online for loans up to €120,000 Download the application form available online for loans up to €300,000 and return it to your branch or relationship manager No, call or go into your local branch Yes Yes Yes

Alternatives to no personal guarantee business loans

A no personal guarantee business loan is a good option for you if you want a term loan with consistent repaymentswithout putting your personal assets on the line. It also keeps your business credit history separate. If your business defaults, your personal credit score and creditworthiness won’t be damaged.

But there are also other financing alternatives that also don’t require a personal guarantee.

Here are three no personal guarantee financing options

1. Revenue based financing

Revenue based financing allows you to use your company’s existing recurring revenue – both contracted and non-contracted – to release working capital. Revenue based finance often doesn’t require a personal guarantee because it’s a more innovative type of funding than a typical small business loan. At Financefair, we never ask for a personal guarantee or a guarantor.  

With revenue based finance, you can get an advance on a percentage of the funds associated with subscriptions and long-term contracts. You’re then able to use that capital as you see fit – whether that’s fulfilling a new contract, growing your company, or paying day-to-day expenses. We’ll convert up to 20% of your annual recurring revenue into growth capital. 

Your funding amount is directly related to your cash flow projections and monthly revenue, which means it can grow as your business grows. Compared to a standard business loan, it’s much more flexible as the loan amount isn’t fixed. 

This type of financing is a great option for companies that have recurring revenue but no tangible assets, such as those with a subscription business model. It’s also a good option for those who want to be able to adjust their funding as their annual revenue grows. 

This is what Zeus Scooters did, using revenue based finance through Financefair to buy the scooters needed to expand into new territories. Read more in our case study on Zeus Scooters.

For more about how this type of funding works, see our article: Revenue based financing: What it is and how to get started.

2. Line of credit

A business line of credit is very similar to an overdraft. There are two providers in Ireland: AIB and Financefair. AIB can offer a credit line to customers with a business account, but they state on their website that they may need security (such as a personal guarantee).

Financefair is the only provider in Ireland that can offer a standalone line of credit without a personal guarantee

When you have a line of credit, the funds are available to draw down when you need them. All you need to do is request funds, and your provider will send the money directly to your business bank account

With a line of credit, you can:

  • Easily pay off seasonal business expenses that you might not have the money for, or payments for labour costs or stock that are larger than average
  • Work with other providers besides your business bank, as you’d have to with an overdraft. This is helpful if you haven’t had your business bank account for long, as many banks require a certain amount of time between opening your account and requesting financing. 
  • Set your own terms for drawing down and repaying the funds – as a lump sum or monthly. 
  • Review your line of credit after the initial 12 months are up. You might choose to close the facility or leave it open to cover any unexpected expenses. 

For more in-depth information on credit lines, see our article: Online business line of credit: Everything you need to know to get started

3. Invoice discounting

With invoice discounting, you’ll get an advance on your invoices to turn your existing contracts into working capital to finance new projects. Depending on which provider you choose, it’s possible to get invoice discounting without a personal guarantee. However, providers don’t state on their website that they require a personal guarantee: you might not know until you apply. 

Also known as invoice financing, this type of funding is a good option if you’re looking for quick access to cash without committing to a longer-term business loan. 

There are three types of invoice discounting:

  • Full book: You finance up to 90% of the value of all your invoices. 
  • Selective: You finance up to 90% of the value of some of your invoices, usually your largest contracts.
  • Invoice factoring: With this kind of invoice discounting, you finance all your invoices, but the lender takes over credit control for you. 

Invoice discounting facilities are either:

  • Disclosed: This means your customers are aware you’re using invoice discounting. Invoice factoring is always disclosed. 
  • Undisclosed: Your customers remain unaware. This is the type of invoice discounting that Financefair offers.  

We recently worked with energy solutions provider Work Work, and provided them with a  used selective invoice financing facility. They had to fund weekly stock purchases and labour costs, but their invoice payment terms were for 60 days. 

By using selective invoice financing, Work Work was able to get an advance on 90% of the invoice amount on selected invoices. This meant that the company could continue to grow without having to wait for the invoice to be paid. 

For more information on invoice financing and how it might be a good option for your business, read our article: Invoice discounting: How to get started

Why choose Financefair for your business financing?

Financefair, founded in 2015 as InvoiceFair, provides innovative funding solutions to growing businesses. We offer revenue based finance, online business line of credit, and both full book and selective invoice discounting. 

We’re the only provider in Ireland that can offer a standalone line of credit and selective invoice discounting.

Here are a few reasons to work with Financefair: 

Get business funding without a personal guarantee

At Financefair, we don’t require a personal guarantee from the business owner for any of our funding solutions. This is because we base our decisions on real-time accounting and banking data and take the time to speak with you to fully understand your business needs and growth plans. This gives us the information we need to understand the potential risk.  

Because we can offer a variety of finance products, it’s easier for us to find a solution that’s a good fit for your company’s needs, and we’ll work with you and your finances to do that. We’ll also review your needs regularly to ensure you’ve got the best business financing solution for your needs. Once you get started with Financefair, it’s easy to adjust your funding as your business evolves. 

Here are some other important details to know about our products:

  • Our funding limits are flexible: As your business grows, so can your funding limits. We know working capital isn’t static, and it can ebb and flow. If your revenue is lower than expected one month, we can discuss reducing your funding – rather than stopping it altogether. 
  • Our pricing is transparent: You’ll know up front exactly what you’ll pay when you choose Financefair funding, as we have no hidden fees or costs.
  • You don’t have to have blue chip debtors to work with us: It’s sometimes a struggle for small business owners with a subscription or recurring revenue model to find funding from banks. But because we offer revenue based finance, we can help companies with these business models. 

Get an indicative offer in one business day

When you apply for funding, you want to know as soon as possible if you’ve been approved, and if you can get the amount you need. Assuming you meet our eligibility criteria, we can give you an indicative offer in one business day

When you accept our offer and send us the documentation we need, we’ll work with you to set you up on our platform as soon as possible. When the application and onboarding process is complete, we’ll set up your facility within 24 hours so you can access your funding.

We can do this thanks to the decades of financial services experience our team has. Combining this with the data analytics in our platform, we’re able to accurately assess and monitor risk. This means we can move quickly and get you the decision you need. 

Finance your business without the need for a personal guarantee

In this article we’ve taken a look at what a no personal guarantee business loan is, along with some other more flexible alternatives that might work better depending on your situation and type of business– revenue based finance, line of credit and invoice discounting.

If you’re ready to discuss your funding needs with our experienced team, get in touch with us today to start the conversation. 

Sources

¹https://businessbanking.bankofireland.com/credit/business-loans/business-loan/ 

²https://aib.ie/business/loans-and-finance/loans-up-to-60k and https://aib.ie/business/loans-and-finance/loans-from-60001-300k

³ https://www.ptsb.ie/business-banking/term-loans/

https://www.linkedfinance.com/business-financing/ and https://www.linkedfinance.com/borrower-faqs/

https://www.gridfinance.ie/short_term_loans and https://www.gridfinance.ie/help_centre/faqs

⁷https://santiagosme.ie/about/faq

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