PurposeThe purpose of this paper is to study the determinants of the use of personal loans in small and medium‐sized enterprises (SMEs).Design/methodology/approachPersonal loans are addressed as a function of the borrower and collateral. To empirically test the hypothesis of this study, a probit model was applied to a group of companies in Bahia Blanca, Argentina, with a previous analysis of the possible effects of sample selection.FindingsOlder companies, firms with lower expected growth rates, younger owners, those who seek to create value or growth, and owners who perceive low emotional costs associated with bankruptcy, are less likely to use personal loans to finance their operations.Research limitations/implicationsThis study is limited by the availability of data on SMEs in Argentina.Social implicationsThe results highlight the importance of financial aid programmes that focus on SME scarce availability of collateral.Originality/valueThis study makes three principal contributions: first, it investigates the phenomenon of personal loan utilisation in SMEs; second, it analyses financing decisions from both the supply and demand perspectives; and third, it presents a database that includes variables that have not been previously studied in Argentina or other emerging economies.