Personal liability

Definition

Personal liability in business and finance refers to the legal responsibility of an individual, often the owner or operator of a business, for the debts, obligations, and liabilities of that business.

What is personal liability?

Personal liability means that the individual’s personal assets, such as their home, savings, and other possessions, may be at risk if the business is unable to meet its financial obligations. 

Choosing the right legal structure for the business is crucial for achieving personal liability protection. Also, following legal and regulatory requirements, maintaining accurate financial records, and adhering to corporate governance practices are essential for maintaining personal liability protection.

Example of personal liability

John, a small business owner, guarantees a loan for his business using his personal assets as collateral. If the business fails to repay the loan, John is personally liable, meaning his personal assets, such as his home or savings, could be seized to satisfy the debt.

Ready to grow your business?

Clever finance tips and the latest news

Delivered to your inbox monthly

Join the 95,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

Our offices:

Disclaimer: Swoop Finance Ltd (Swoop) helps US firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop may receive a commission or finder’s fee for effecting such introductions. If you feel you have a complaint, please read our complaints section highlighted above and also contained within our terms and conditions.
How Swoop makes money: In order to provide services free of charge, Swoop generates revenue through commission from companies featured on our platform. The commission we receive does not impact the cost of the product, service, or policy, and your payments remain unaffected by our commission structure.

© Swoop 2025

Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop