Personal Guarantee

Published Jun 25, 2025
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What is a Personal Guarantee?

A Personal Guarantee is a legal document in which an individual (the guarantor) agrees to be held responsible for the financial obligations of a borrower in the event of default. It is often used in business transactions, where a lender may require a business owner to provide a Personal Guarantee to secure a loan. The primary keywords, "business loan no personal guarantee," refer to loans that do not require such a guarantee.

Key Features

✓Provides assurance to lenders
✓Enables credit for businesses with limited credit history
✓Defines the guarantor's legal obligations
✓Can help secure better loan terms

Scenarios That Call for a Personal Guarantee

A Personal Guarantee is often required when a business seeks to secure a loan but lacks the necessary credit history or assets to secure the loan on its own. It's also common in situations where a business owner wishes to separate their personal financial liability from their business, which might be the case when seeking a "business loan without personal guarantee."

Pros

✓Can help businesses secure loans
✓Provides assurance to lenders
✓Can lead to more favorable loan terms
✓Defines the obligations of the guarantor

Cons

✗Places personal assets at risk
✗May impact personal credit
✗Can create financial stress for the guarantor

Common Uses

✓Securing business loans
✓Obtaining credit for a new business
✓Providing financial assurance to suppliers
✓Securing leases or rental agreements

About this document

A Personal Guarantee is a legal document where an individual agrees to be responsible for another's debt or obligation if they default.

PassTheBar AI

This document utilizes our advanced PassTheBar AI technology, ensuring bar-exam precision and comprehensive legal coverage.

Create a Personal Guarantee

This document is designed to comply with the laws of all 50 states.

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Legal Notice: Comments are personal opinions and do not constitute legal advice. Always consult a qualified attorney for matters specific to your situation.