small business loan?

[lucyshandbag]

i am thinking about setting up my own business but not sure how a small business loan works.  if i took out a business loan and my business failed, how would i pay the loan back? would i be expected to pay it back with my own money or is there some sort of cover? 

[Loosehead]

Well as you are a new business, the bank would not lend any money unless you guarantored it personally so in the case of the business folding the bank would persue you for the loan.

[Oneeyedvic]

The only way you may be able to get out of giving a guarantee is where you are looking at buying something with a value - eg a car. If you give (as an example) a 30% deposit, the finance company may see the asset (the car) as sufficient security and not require your personal guarantee.

If you are looking at raisingmoney for any other pupose - eg cashflow, then you would need a loan (as opposed to a lease or hire purchase agreement) and then the finance company will require your guarantee.

Most finance companies will not consider lending you any money if you are not either investing a load of money of your own or at the very least a home owner with equity inyour property.