Advising Small Business Clients on Personal Guarantee Negotiations

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For your small business owner clients, signing a personal guarantee has become standard practice as part of the commercial loan approval process. While this is often the price of doing business, what does a personal guarantee (PG) really mean? What, if anything, can your clients do about them?

A PG gives the bank permission to go after personal assets should the business default on the loan. In addition to letting lenders pursue personal assets, many allow the PG to be called for things like technical default, additional borrowings, a sale of assets, death, or incapacitation. Some even allow the lender to obtain additional collateral on demand if the lender determines the loan to be undersecured.

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Fantastic article. Very easy to understand. Thank you.

Thanks for a great article. If I sign a PG in a partnership, then years later convert it to a corporation, does the PG I signed as a partner of the partnership, apply to debts of the corporation?

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ThIs article was awesome! I am a commercial banker and see the PG used excessively where I work. I personally am looking at borrowing money and don't want to sign a PG so thanks for giving me ideas for my own deal and for future customers!

I know that this article is aimed at the US market, but it applies globally. THe PG Insurance is now also available in the UK at www.pgicover.co.uk

What is the percentage a shareholder must own to have to sign a personal guarantee? Is it 20 percent or does it depend on the different banks?

does the bank have a duty of care to inform all partners in a buisness of any defaults made on properties held for gaurentee by any of the partners, eg if one party in partnership fails to make payments on property held as assurance for loan causing default on buisness loan

Hello, I Celina Wheels a single from California USA, will like to share this great testimony on how i got my loan from Gordy's Loans when we were driven out of our home when i couldn't pay my bills anymore, After been scammed by various companies online and denied a loan by my bank and other some other credit union i visited. my children were taken by the foster care, i was all alone in the street. Until a day i shamefully walked into an old school mate who introduced me to Gordy's Loans. At first i told her that i am not ready to take any risk of requesting a loan online anymore, but she assured me that i will received my loan from them. On a second thought i took due to my homelessness i took a trial and applied for the loan, luckily for me i received a loan of $50,000.00 from ([email protected]). Am happy i took the risk and applied for the loan. my kids have been given back to me and now i own a home and a business of my own. All gratitude goes to Gordy's loans for giving a meaning to my life when i had lost all hope.