Glossary
What is Personal Guarantee?
A personal guarantee is a legal promise by an individual, usually a business owner, to repay a business debt personally if the business cannot. Most small business lenders require one from owners above a certain ownership threshold; for SBA loans, owners of 20% or more generally must guarantee. An unlimited guarantee covers the full debt, while a limited guarantee caps the amount. A guarantee means your personal assets could be at risk if the business defaults.
Example
The majority owner of a retail store signs a personal guarantee on the company's line of credit.
Related funding
SBA Loans: Government-backed loans with long terms for growth, real estate and acquisitions.
Related terms
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