Do I need a personal guarantee for skid steer equipment financing in 2026?
Most skid steer equipment loans require a personal guarantee, but the machine as collateral can soften or, with strong business credit, remove it.
Usually, yes. Most skid steer equipment loans require a personal guarantee making you personally liable if the business defaults. The machine acts as collateral, which can reduce or waive the guarantee for businesses with 2-3 years of history and strong credit. SBA loans always require it from 20%+ owners.
Yes, in most cases you should expect to sign a personal guarantee (PG) for skid steer equipment financing in 2026. A personal guarantee makes you personally liable for the debt if your business defaults, so the lender can pursue your personal assets beyond the machine itself. The good news for contractors is that equipment loans are inherently collateralized by the skid steer or compact track loader you are buying, which often lets lenders soften the guarantee or waive it for well-established borrowers.
The equipment serving as collateral reduces the lender's risk, but it does not automatically erase the personal guarantee. As OnDeck notes, "Loans specifically for purchasing equipment may not always require a personal guarantee if the equipment itself serves as sufficient collateral." In practice, newer businesses and contractors with thin or sub-prime credit almost always sign one, because the lender wants a second source of repayment beyond a used machine whose resale value can fall.
When you can avoid a personal guarantee
Avoiding a PG generally takes time, revenue, and business credit. Lender marketplace Nav reports that "Two to three years in business is a common threshold for loans that don't require a PG," typically paired with strong, consistent monthly revenue. Fora Financial frames the same trade-off for equipment specifically: collateral "reduces risk, but it doesn't necessarily eliminate it," and "If your business is newer or has a limited track record, the lender or lessor may want a PG as additional security."
If you have a multi-year track record and the loan is small relative to the machine's resale value, it is worth asking the lender to limit or drop the guarantee. Startups and bad-credit applicants have less leverage here, so the machine's collateral value carries more of the deal. See our guides on startup construction financing and bad credit equipment loans for how lenders weigh these factors.
SBA loans are a special case
If you finance a skid steer through an SBA 7(a) loan rather than a dealer or independent equipment lender, the personal guarantee is mandatory. Per Bankrate, "Any business owner who owns at least 20% of the business must provide an unlimited personal guarantee" — meaning the lender can pursue enough of your personal assets to cover the full loan, interest, and even legal fees.
SBA collateral rules scale with loan size, separate from the guarantee. According to Pursuit, for 7(a) loans of $25,000 or less "the SBA doesn't require lenders to take any collateral," while loans above $350,000 require additional collateral such as personal real estate. For more on the SBA path, see SBA loans for startup equipment.
How to limit your exposure
Even when a guarantee is unavoidable, you can negotiate its scope. Ask for a limited or "several" guarantee that caps your liability rather than an unlimited one, push the lender to rely on the equipment lien first, and build business credit and time-in-business so future deals need no PG at all. Reading the guarantee language before you sign is the single most important step — the difference between a limited and unlimited PG can be your house.
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