Everything You Need to Know About Personal Guarantee
When you apply for a traditional bank loan, a business line of credit, an SBA loan, or some other secured small business loan, you may have to pledge an asset as collateral to secure the funding. In fact, many lenders will require you to sign a personal guarantee if your business lacks a perfect credit history. Though in the absence of a perfect credit score, good annual revenue, and a positive cash flow, a personal guarantee may increase your chances of obtaining a loan, you shouldn't race into marking it without first agreeing on what it involves. In this post, we’ll explain what is a personal guarantee and share some of the important things you need to know about it. What’s a Personal Guarantee? A personal guarantee refers to a small business owners’ legal promise to repay the borrowed funds with its personal assets if he/she defaults on the loan. The personal guarantee can be secured or unsecured, meaning you may or may not require to pledge an asset as part of the gu...