A Personal Guaranty is a legal document through which an individual promises in writing to repay a loan or credit issued to a business entity or another party.
A Personal Guaranty may be provided by an individual to assume responsibility for the repayment of a loan to his or her business. In the event that the business is unable to pay this debt, the individual and her personal assets are collateral for the business loan. With a Personal Guaranty, an executive can pledge their own assets and agree to repay a debt from their personal capital in the case of a business loan default.
A Personal Guaranty gives a creditor a legal claim to the personal assets of an individual. This can make more credit available to a business. This may also improve the lending terms, as they will be based on the profile of both the business and the individual in the underwriting process.
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