When a Business Debt Becomes a Personal One

"It's the business's debt, not mine" is true less often than most small business owners expect. A few common structures quietly erase that line.

Personal guarantees. Most small business loans and lines of credit require one — meaning if the business can't pay, the lender can pursue you personally, not just the business's assets. This is standard practice for lenders working with newer or smaller businesses, not a sign of a bad deal.

Structure matters. A sole proprietorship has no legal separation from its owner at all — business debt is personal debt by default. An LLC or corporation offers more separation in theory, but a personal guarantee, a card opened under your own SSN rather than an EIN, or commingled finances can undo that separation in practice.

If a business debt has become a personal problem, the usual consolidation and settlement paths for unsecured debt often apply. See what applies to you with a free check-in.