{"id":208655,"date":"2025-11-17T06:14:05","date_gmt":"2025-11-17T14:14:05","guid":{"rendered":"https:\/\/www.nationalfunding.com\/blog\/?p=208655"},"modified":"2025-11-10T16:15:27","modified_gmt":"2025-11-11T00:15:27","slug":"an-easy-guide-to-personal-guarantees-and-business-loans","status":"publish","type":"post","link":"https:\/\/www.nationalfunding.com\/blog\/an-easy-guide-to-personal-guarantees-and-business-loans\/","title":{"rendered":"An Easy Guide to Personal Guarantees and Business Loans"},"content":{"rendered":"<p><span data-contrast=\"auto\">A personal\u00a0guarantee is a\u00a0legal commitment\u00a0where\u00a0the borrower\u00a0guarantees they\u00a0will be personally responsible for\u00a0any debts\u00a0in case of default\u00a0on a\u00a0<\/span><a href=\"https:\/\/www.nationalfunding.com\/small-business-loans\/\"><span data-contrast=\"none\">small business loan<\/span><\/a><span data-contrast=\"auto\">. Personal guarantees create a personal liability for the debt rather than pledging specific assets as collateral.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">It is\u00a0very common\u00a0for lenders to require a personal guarantee, including when the borrower is\u00a0\u201ccreditworthy,\u201d\u00a0meaning they have strong financials and a good business credit score. When the owners of the business are willing to\u00a0be personally liable, it builds the lender\u2019s confidence in their ability to pay back the loan, and this\u00a0can\u00a0increase\u00a0their chances of getting approved.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">There are two types of personal guarantees that can be made:<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"1\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Limited personal guarantees allow the lender to seek repayment up to a specified dollar amount or percentage of the money owed.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\u25cf\" data-font=\"\" data-listid=\"1\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\u25cf&quot;,&quot;469777815&quot;:&quot;multilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Unlimited personal guarantees\u00a0make the guarantor responsible for\u00a0all of\u00a0the loan obligations, meaning\u00a0the lender\u00a0can seek repayment until the full amount is recovered\u00a0(including fees and interest).\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">While collateral and personal guarantees sound similar,\u00a0as\u00a0both can be\u00a0terms\u00a0on\u00a0a loan agreement,\u00a0they have a few main differences.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h2 aria-level=\"2\"><span data-contrast=\"auto\">The Differences Between Collateral and Personal Guarantees<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:360,&quot;335559739&quot;:120}\">\u00a0<\/span><\/h2>\n<table data-tablestyle=\"Custom\" data-tablelook=\"0\" aria-rowcount=\"8\">\n<tbody>\n<tr aria-rowindex=\"1\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><b><span data-contrast=\"auto\">Personal Guarantees<\/span><\/b><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><b><span data-contrast=\"auto\">Collateral<\/span><\/b><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"2\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Must be owned 100% by the borrower<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">N\/A<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Yes<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"3\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">The owner of the assets\u00a0being leveraged<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:0,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:0,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:0,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:0,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:0,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">The individuals that own the business<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">The business or LLC itself<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"4\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Requires a spouse\u2019s signature<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Yes,\u00a0depending on the state of residence,\u00a0when\u00a0the assets are jointly owned or will\u00a0impact\u00a0the spouse.<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:0,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:0,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:0,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:0,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:0,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">No<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"5\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Multiple people must sign<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Only if multiple guarantors are signing the personal guarantee.<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:0,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:0,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:0,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:0,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:0,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Yes, multiple people will\u00a0be required\u00a0to sign if there are multiple owners in the business.<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"6\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Limited or unlimited<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Can be both<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Unlimited up to the amount of the debt still owed<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"7\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Is\u00a0released\u00a0when the loan is paid off<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Yes<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Yes<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<tr aria-rowindex=\"8\">\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Gets filed on UCC liens<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-bottom=\"0px none #000000\" data-ccp-padding-bottom=\"0px\" data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">No<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<td data-celllook=\"4369\">\n<p data-ccp-border-between=\"0px none #000000\" data-ccp-padding-between=\"0px\"><span data-contrast=\"auto\">Yes<\/span><span data-ccp-props=\"{&quot;134245417&quot;:false,&quot;201341983&quot;:0,&quot;335559740&quot;:240,&quot;335572071&quot;:0,&quot;335572072&quot;:0,&quot;335572073&quot;:4278190080,&quot;335572075&quot;:0,&quot;335572076&quot;:0,&quot;335572077&quot;:4278190080,&quot;335572079&quot;:0,&quot;335572080&quot;:0,&quot;335572081&quot;:4278190080,&quot;335572083&quot;:0,&quot;335572084&quot;:0,&quot;335572085&quot;:4278190080,&quot;335572087&quot;:0,&quot;335572088&quot;:0,&quot;335572089&quot;:4278190080,&quot;469789798&quot;:&quot;nil&quot;,&quot;469789802&quot;:&quot;nil&quot;,&quot;469789806&quot;:&quot;nil&quot;,&quot;469789810&quot;:&quot;nil&quot;,&quot;469789814&quot;:&quot;nil&quot;}\">\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">In some states, a borrower may\u00a0be required\u00a0to obtain a spouse\u2019s signature on a personal guarantee, even if the spouse is not directly involved in the business. This requirement often arises in\u00a0community property states\u00a0or in cases where\u00a0jointly owned assets\u00a0(such as a home) could be affected by the guarantee.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The goal is to ensure that both spouses acknowledge the potential impact on shared property if the business defaults on the loan. You can learn more about these requirements through your state\u2019s government or legal resources.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">In most cases,\u00a0collateral documents\u00a0related to business assets will only need the signat<\/span><span data-contrast=\"auto\">ures of the business owners, since those assets (not the spouse\u2019s property) secure the loan.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">As long as\u00a0the debt and interest get paid off, collateral\u00a0will be returned to the owners, and\u00a0the personal guarantee will not\u00a0need to\u00a0be enacted.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Note:\u00a0If\u00a0you\u2019re\u00a0leasing a vehicle for personal or business use and do not own it in full, you cannot use it as an asset for\u00a0securing\u00a0the loan.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<h2 aria-level=\"2\"><span data-contrast=\"auto\">Personal Guarantees Are Legally Binding<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559738&quot;:360,&quot;335559739&quot;:120}\">\u00a0<\/span><\/h2>\n<p><span data-contrast=\"auto\">Personal guarantees are legally binding agreements. This means the guarantor becomes personally responsible for repaying the business loan if the business defaults. In such cases, the guarantor\u2019s personal assets may be used to satisfy the debt.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:0}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The specific rules and consequences can vary depending on your\u00a0jurisdiction, the terms of the loan agreement, and your individual circumstances.\u00a0You should always consult a licensed attorney to understand what applies to your\u00a0particular situation.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:0}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"7\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">When you speak with counsel, consider asking about situations such as:<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"7\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">What happens if one or more guarantors or owners exit the\u00a0company.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"7\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">How personal and company bankruptcies affect\u00a0the personal\u00a0guarantee.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"7\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">Whether and how the borrower can upgrade or replace assets covered by the loan.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"7\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">What to do if the borrower receives an offer to sell the financed asset \u2014 even at or above market\u00a0value.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">These situations are common, and your legal counsel can help you understand your options and obligations.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">If you plan to exit your company,\u00a0you\u2019ll\u00a0typically need to discuss the personal guarantee with both the remaining owners and the lender. A lender is not\u00a0required\u00a0to release you from a personal guarantee, but they may agree to\u00a0modify\u00a0the arrangement.\u00a0Possible options\u00a0can include the business providing\u00a0additional\u00a0collateral or the remaining owners increasing their own personal guarantees to replace yours.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;335559738&quot;:240,&quot;335559739&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">If the company goes bankrupt, you may still be personally liable for any obligations you\u00a0guaranteed, depending on the specific terms of your personal guarantee. If you personally file for bankruptcy, your liability under that guarantee will typically be handled according to the bankruptcy laws and procedures in your\u00a0jurisdiction. You should consult your legal counsel to understand how these rules apply to your situation.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><span data-contrast=\"auto\">When it comes to selling, replacing, or upgrading assets, lenders tend to be a bit more flexible when the new asset is worth more or has a higher demand. This makes\u00a0it\u00a0easier\u00a0for them\u00a0to liquidate in case of default so they can recover their losses with\u00a0less\u00a0administrative headaches.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0P<\/span><span data-contrast=\"auto\">ersonal guarantees are normal when a company applies for a small business loan. If your lender asks, don\u2019t worry. They\u2019re simply looking to limit their risk and to confirm your ability to make payments before they lend your business the money.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><i><span data-contrast=\"none\">National Funding<\/span><\/i><span data-contrast=\"none\">\u00a0<\/span><i><span data-contrast=\"none\">does not provide tax,\u00a0legal\u00a0or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax,\u00a0legal\u00a0and accounting advisors.<\/span><\/i><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A personal\u00a0guarantee is a\u00a0legal commitment\u00a0where\u00a0the borrower\u00a0guarantees they\u00a0will be personally responsible for\u00a0any debts\u00a0in case of default\u00a0on a\u00a0small business loan. Personal guarantees create a personal liability for the debt rather than pledging specific assets as collateral.\u00a0\u00a0 \u00a0It is\u00a0very common\u00a0for lenders to require a personal guarantee, including when the borrower is\u00a0\u201ccreditworthy,\u201d\u00a0meaning they have strong financials and a good<a class=\"excerpt-read-more\" href=\"https:\/\/www.nationalfunding.com\/blog\/an-easy-guide-to-personal-guarantees-and-business-loans\/\" title=\"ReadAn Easy Guide to Personal Guarantees and Business Loans\">&#8230; Read more &raquo;<\/a><\/p>\n","protected":false},"author":38,"featured_media":206092,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-208655","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-lending"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>An Easy Guide to Personal Guarantees and Business Loans - 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