What Is a Personal Guarantee?
A personal guarantee is an individual’s legal promise to repay credit issued to a business for which they serve as an executive or partner. Providing a personal guarantee means that if the business becomes unable to repay debt then the individual is personally responsible. The personal guarantee provides an extra level of protection to credit issuers, who want to make sure they will be repaid.
Understanding Personal Guarantee
A personal guarantee can be used in a credit deal to secure funding for a business. Small business founders and executives will often use a personal guarantee since they have a vested interest in the launch and business development of a company. Oftentimes small business owners and executives will make a substantial initial investment using their own capital. To obtain additional capital executives can also seek funding with the backing of a personal guarantee. This requires the