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What Every Guarantor Should Know About The One-Action Rule And Deficiency Actions, David R. Hague
What Every Guarantor Should Know About The One-Action Rule And Deficiency Actions, David R. Hague
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Personal guarantees are an inherent part of obtaining a business loan. A personal guarantee is an unsecured promise from an individual to make loan payments when the business is not able to do so. In other words, it is simply an added assurance for the lender that the loan will be paid in full. Generally, if the borrower defaults, the lender can file suit against both the borrower and the guarantor for payment. Oftentimes, lenders require another layer of protection, in addition to the personal guarantee: collateral to secure the loan.
Signing a personal guarantee comes with substantial risks, primarily …