Business loans – particularly those for new startup businesses – often require the borrower to provide a personal guaranty for the bank to proceed with the loan.  A number of the clients that we speak with aren’t clear that if the business is unable to make the loan payments that they are personally liable to pay the business loan back even if the business closes.  In short, you promise to pay the loan back even if the business no longer exists – from your personal assets.

The following article, written by an attorney, helps explain the personal guaranty…     

Personal Guaranties: What Small Business Owners Need To Know

BY JOSEPH F. KOLB

Why do small business owners need to know about personal guaranties? Because personal assets – homes, cars, checking accounts – are on the line, not just business assets.

As a small business owner, it’s likely you’ve been asked to sign a personal guaranty agreement.  If not yet, you will be. Personal guaranties are staples of small business financing.  Consequently, it’s to your benefit to know a few things about them. Continue reading →