Personal Guaranty (for business credit)
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This Personal Guaranty pertains to an individual agreeing to personally guarantee repayment of business debt to a creditor.
Available in MS Word. 1 page.
Description
Before approving a business line of credit or a business loan, lenders/creditors/vendors will often require a personal guaranty from the owner of the business. This Personal Guaranty is for individuals to guarantee repayment to a lender that has provided a line of credit to the individual’s company.
Contents
Personal Guaranty (for business credit)
How to Use
(1) Fill in the blanks with the appropriate information.
(2) Delete the bracketed yellow highlighted instructions.
(3) Review carefully before signing.
FAQs
What is a personal guaranty?
A personal guaranty is an individual’s promise to repay a loan or credit. In this template, the Personal Guaranty is for credit extended to a business. The person who agrees to the personal guaranty will usually be the owner, partner, or shareholder of the business. By providing a personal guaranty, the individual becomes personally liable if the business does not repay the debt.
What are the differences between a loan and a line of credit?
A loan is a lump sum of money that is repaid over a fixed term. In contrast, a line of credit is a revolving account that lets the borrower draw, repay and redraw from available funds.
Why does the lender want me to sign a personal guaranty?
The lender wants to make sure that the loan or credit it extends to your business will be repaid. This is a common request by a lender, especially if your business is new or is not yet profitable. If you provide additional reassurance of repayment through a personal guaranty, it typically increases the likelihood that the loan or credit application for your business will be approved.
Does a personal guaranty have to be witnessed or notarized to be valid?
Generally, no. However, having a witness or having it notarized helps to establish that the personal guaranty was not forged and was signed voluntarily.
What is a continuing guaranty?
A continuing guaranty is an agreement by the guarantor to be liable even if several different obligations are made, renewed or repaid over time. In contrast, a specific guaranty is limited to only one individual transaction.
