If you are a sole trader, business debt is your personal debt. If you run a company, lenders commonly ask directors for a personal guarantee, which means you are personally liable if the company cannot pay. Credit enquiries and defaults can appear on your personal credit file and affect future home loans.
What it depends on
The full answer depends on your specific circumstances. Here’s what matters.
Your business structure
Sole traders and partners are personally liable for business debts. Companies are separate legal entities, but guarantees can bring the liability back to you.
Credit enquiries
Each application can create an enquiry on your file. Many applications in a short period can make lenders cautious.
Security offered
Using your home as security for a business loan puts your home at risk if the business fails.
The last 10%
What a qualified professional can add
The answer above covers the general position. Here’s where professional judgement — applied to YOUR specific situation — makes the difference.
- Structuring finance to limit personal exposure where possible
- Negotiating guarantee limits or releases
- Sequencing personal and business applications to protect borrowing capacity
Questions to ask before you engage one
If you decide to engage a professional, these questions help you evaluate whether they’re right for your situation.
Is a personal guarantee required, and is it limited or unlimited?
Will this loan be secured against my home?
How many credit enquiries will this create?
How will this loan affect my ability to borrow for a home?
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General Advice Warning
The information on this page is general in nature and does not take into account your personal objectives, financial situation or needs. It is provided by Global Mutual Funds Pty Ltd (ABN 20 090 555 436, AFSL 222640) and should not be relied upon as a substitute for professional advice. Consider whether the information is appropriate before acting on it. Read our Financial Services Guide.