Due to the recent epidemic, many SMEs have resorted to borrow from banks for financing. Among all financing schemes, "The Special 100% Loan Guarantee under the SME Financing Guarantee Scheme" has been a hot topic in this city, with banks offering very low interest rate with their loans which does not require assets to be reviewed. However, one of the criteria is that the company's shareholders/ultimate beneficial owners who have accumulated more than 50% equity will have to provide personal guarantee for the loan because the banks need to ensure the company has the means to repay the loans. I believe this criteria is nothing new to the owners.
But have you considered that this may affect the guarantor's own mortgage application!? There was once a client (unlimited company-sole proprietorship) that when he was purchasing a property, a certain bank while reviewing his personal credit record (TU Report) found that he was carrying the company's SME loan at the same time. The bank actually regarded this loan as a loan in his personal name, resulting in the expected monthly payment exceeding the upper limit of the proportion of monthly income, and ultimately failed to pass the stress test and not being approved for the mortgage.
Of course, as we all know about a limited company, due to the inherent condition of being attached with rights (limited debt liability), the line between the company and the individual is very clear, but if a private guarantee is involved, this is something worth discussing.
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