My sister and I brought home a lot of stray pets as children.
Every time we did, we promised my parents “I will take care of it, I promise.”
And every time my parents agreed we could keep the stray and then, of course, they took care of it.
A personal guarantee in regards to a credit line or a lease or a contract is an empty promise.
UNLESS, the person actual has the liquidity and/or assets to back up the personal guarantee.
Face it, if the business fails or is unable to pay its debts, then the individual is probably not making money.
Then, you get a judgment on the individual, they file for bankruptcy and you are out potentially hundreds of thousands of dollars.
I have seen many cases where a corporation has leased a property, an individual signed a personal guarantee, and the corporation ends up not paying rent and owing at least $50,000 in rental
The individual doesn't actually have any money so they walk away from the personal guarantee by settling for pennies on the dollar.
Be smart in your business practices, do your research into an individual and don’t get a personal guarantee that is little more than a signature on a piece of paper.
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