Commercial Loans-Personal Guarantee

A commercial loan personal guarantee is a business owner agreement with a lender to be individually responsible for a business debt. Generally, these guarantees are requested by the lender when making loans to small business corporations or limited liability companies (LLC).  The lender wants to ensure that if the company defaults on the loan that they are fully repaid. Typically these agreements are signed by a person involved in the business such as an owner, officer or board of directors.

You may be able to avoid a commercial loan personal guarantee by negotiation, building an excellent corporate credit profile, having a strong business with great cash flows and obtaining referrals of lenders who do not require personal guarantees.

If you are not able to avoid personal responsiblity, the lender will examine your personal wealth, including all your personal assets, debts, tax returns and bank accounts. If you truly believe in your business endeavour the lender will expect you to provide this information and personally guarantee your corporate debt.