Question about Personal Guarantee on a Business Loan

[podgerkev]

My partner and I are forming a corporation and taking over an existing business. We will be seeking a business loan to cover various start up fees and minor renovations.

As I understand it, banks will often ask for a personal guarantee on a loan to a corporation. My question is - will this appear on my credit report? I am planning to buy a house in the next year and I do not want my corporation's loan being held against me when I go to get a mortgage.

Thanks in advance for the help!

[cdencore]

If your loan is personally guaranteed, then I am pretty sure that this will be treated as if it were a personal loan. That means that it will be taken into consideration when you apply for a mortgage.

[podgerkev]

Thanks for the reply!

Is there anyone who has been through this process who can confirm that this is indeed the case?

[baz5]

I believe that is negative. It's a business loan with no connection to you personally.

But with your personal gurantees, and you don't pay the loan or go out of business, you will pay the loan with your personal guarantees.

[wheel]

Anyone actually know the answer? I've never borrowed with my incorporation, in a previuos business I had a personal loc that I used that absolutely showed up. But if the loan is registered to the business and only guaranteed by the individual, I don't know if it shows up on a credit check. Seems like it might not.

Maybe ask the bank.