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Personal guarantees on business credit

Signing one means you pay if the business does not, LLC or no LLC. Lenders ask for it early. A lender may not insist that your spouse be the one who signs.

Reviewed by Jake Lawrence on 2 min read

A personal guarantee is a promise to pay another party's debt if it does not. On business credit, the other party is your company, and the guarantor is you.

What you are agreeing to

A guaranty is an assurance of the future payment of another person's debt. It does nothing while the business pays. If the business defaults, the guarantor can be made to answer for the debt. That is the point of it: the lender gets a second, personal source of repayment.

Forming an LLC or corporation limits the owners' liability for the company's debts. A guarantee is not the company's debt; it is your own promise. The entity does not shield it.

Why lenders ask

A new business has little record of its own, and the SBA notes that a new business is typically judged by its owner's personal credit. A guarantee ties the owner's finances to the loan in a way a credit score alone does not. Expect one on most early loans, lines of credit and business cards.

The spouse rule

Under Regulation B, a creditor may not require the signature of your spouse or anyone else if you qualify for the credit on your own under its standards. If you do not qualify alone, a creditor may ask for a cosigner, guarantor or similar party, and your spouse may serve as one. But the creditor may not require that the additional party be your spouse.

What is sometimes negotiable

Terms differ by lender, and none of these is promised, but owners do ask about:

  • A limited guarantee, capped at a dollar amount or a share of the debt, instead of an unlimited one.
  • A release once the business hits a milestone, such as a payment record or a revenue level.
  • Which owners sign, when there are several.

Read the guarantee itself, not the summary, and have a lawyer read it if the amount matters to you.

Before you sign

  • Know what the business would need to pay, and what you would, if revenue stopped.
  • Keep the business's money in its own account so the line between the two stays clear.
  • Watch your personal credit too; it is part of the deal now. Credit Help covers it.

Sources

  1. Wex: guaranty (Cornell LII) law.cornell.edu
  2. 12 CFR 1002.7, rules concerning extensions of credit, including signatures of a spouse (Cornell LII) law.cornell.edu
  3. SBA: Fund your business sba.gov
  4. Wex: limited liability company (Cornell LII) law.cornell.edu

How this page was made

Drafted with a language model from the sources above. Jake Lawrence read it against those sources and signed it on October 25, 2026. General information, not legal, tax or financial advice: nothing here answers one business's situation, and every lender and supplier sets its own terms. Found an error? See Corrections.

Personal guarantees on business credit | Credit CEO