Subscribe to Entrepreneur for $5
Subscribe

Sweet Promises

When do you have to personally guarantee a loan?

By
This story appears in the January 2001 issue of Entrepreneurs Start-Ups magazine.

Q: I want to borrow for equipment and improvements to my gourmet chocolate shop. The 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.

Continue reading this article - and everything on Entrepreneur!

We make some of our best content available to Entrepreneur subscribers only. Become a subscriber for just $5 to get an ad-free experience, exclusive access to premium content like this, and unlock special discounts.

Entrepreneur Editors' Picks