When do you have to personally guarantee a loan?
Q: I want to borrow for equipment and improvements to my gourmet chocolate shop. The business is incorporated, and I own half. Must I personally guarantee the loan?
A: Like calories, guarantees are hard to avoid. Lenders want guarantees for collateral and for psychological reasons. With a personal guarantee, the lender can go after your personal and business assets if the loan sours. A personal guarantee keeps the borrower focused on the business, making him less likely to quit and more cooperative with the lender.
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