Sally was an accomplished engineer who built a successful business around new speaker technology. The business was now at a point where it was generating more income than she required. A friend told her this would be a suitable time to move from a sole proprietorship to a corporation. She took their advice and incorporated as Sally's Speakers Incorporated. The new approach seemed to be beneficial for tax purposes and the new name conveyed a sense of stability. However, when Sally visited her bank branch for a loan to expand the business, they said they would still require a personal guarantee for the amount requested. Sally was surprised, as she thought that limited liability was the primary distinguishing feature of a corporation.

Why would the bank require a personal guarantee?