So, I have good news and bad news. The good news is that it is possible to separate your business from your personal credit. The bad news is that it is by no means a cakewalk.
Analyzing the Situation:
First off, let's think about how you got yourself into this situation. The fact that you have personally guaranteed the debts of your S corporation means that you are personally liable if the S corporation should default.
Since the bank will still go after you should a default occur, the credit agencies factor this personal guarantee in your credit score. This is done so that other creditors would have an idea of your true potential liabilities should you need to obtain additional credit. If you were a lender, you would want to know this information too.
So what can you do?
Start with contacting your business banker at Capital One and explain the situation and that you are looking to release the personal guarantee on your business.
It is not entirely easy to get rid of a guarantee but you may be successful if you present a strong case to your business banker. You will have to convince him that your business is doing well now and is expected to do so for years to come.
Be prepared to highlight the company's revenue growth, profitability, cash flow position, how results exceed expected goals, excellent repayment history and improved collateral at this point in time. If the banker doesn't budge much, ask them upfront what they need to see to release the guarantee. It is likely, that they'll want you to make larger repayments on your existing loans. But, be sure to ask as every loan officer is slightly different in their approach.
Best of luck with this situation--and feel free to drop me an e-mail at email@example.com to let me know how it turns out.
Ryan Himmel, CPA and registered securities analyst, is the founder and CEO of BIDaWIZ.com, a professional network for small businesses and entrepreneurs to obtain trusted advice and services from a team of CPAs, Enrolled Agents, Financial Planners & Tax Attorneys. His team provides answers to the many finance and tax questions that small businesses encounter every day. Ryan has been quoted in The Wall Street Journal, Forbes, Fox Business and Crain's New York, among other publications. Ryan also regularly contributes to the community with his finance and tax blog.