> If my business goes down, I am personally liable.
Why? I also own my own business (an LLC somewhere in Europe), but if it goes down, I am not personally liable, at all (unless it's due to gross negligence established by a court case).
His comment included the fact the he took out loans with a "personal guarantee".
When you're a small business starting out with no assets (like factories, equipment, etc) -- which means no collateral, or no business revenue... the banks won't provide so-called "business loans" unless there's a personal guarantee.
Therefore, if the business fails and the company is shut down, the founder is still financially on the hook to pay back the loans. (Barring drastic options like filing personal bankruptcy.)
Basically, he personally borrowed money and put it in his LLC to finance it. For tax and other purposes, this is a more complex transaction that is somewhat legally different (the business took out and should repay the loan, avoiding his personally being taxed for the money). However, that's the best way to understand what happened.
Why? I also own my own business (an LLC somewhere in Europe), but if it goes down, I am not personally liable, at all (unless it's due to gross negligence established by a court case).