Personal Guarantee is an agreement that makes one liable for one’s own or a third party’s debts or obligations. A personal guarantee signifies that the lender (obligee) can lay claim to the guarantor’s assets in case of the borrower (obligor) default.
This is according to Business Dictionary.com.
Personal Guarantee is “by making a guarantee you are putting yourself – and your assets – on the hook, by acting as the loan’s cosigner. If your business dissolves, you will be responsible for repayment. Creditors will go after you in the event that your business fails to repay the loan”
This is according to Inc.
A personal guarantee is a promise made by a specific person, an organization or other entity; to be known as the guarantor and to accept responsibility for some other party’s debt in the event the debtor fails to pay it.
The usual and most common purpose of a personal guarantee is typically to allow an organization or person to obtain credit when they lack a credit history, or they do have one, but lack a credit rating sufficient to qualify for credit.
This is according to Wikipedia.
In the business world, personal guarantees are requested when the business is unestablished, and lacks credit history, a credit profile, and credit score.
They are also sometimes required for larger loan amounts, or always requested for loans guaranteed by SBA, conventional bank loans, and it’s also required with some other higher loan amounts in which no collateral is being pledged.
When you complete a loan application and provide your social security number, lenders will almost always pull your personal credit to make the lending decision. And, you’ll also in most cases be providing a personal guarantee
Although this might be a necessity with some conventional and higher amount loans, it’s not required for smaller business credit cards.
With business credit cards, if the business does have established business credit, that credit can be used to secure the credit cards so no personal guarantee is needed.
Did you know that ANYONE who wants to can see YOUR business credit reports?
Unlike with consumer credit, your business credit is public information. That means right now for less than $40 I can pull your business credit and that of any other business I want to.
But here’s the kicker… ANYONE else can do this too!
Your customers, prospects, clients, competitors, suppliers, and anyone else who wants to can easily, quickly, and cheaply pull your company credit profile.
Do you have a good business credit profile established now?
Are you PROUD of what your business credit profile says about you?
I hope so, because many others are seeing it right now making decisions on whether they do or don’t want to do business with you.
This information is commonly pulled on your business, scrutinized, and decisions are made by others you don’t even know about because this information is so readily available.
Click here to get access to your D&B report to see what others see about you right now.
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