FinanceLegal
Personal Guarantee
Also known as: PG, personal loan guarantee
The founder's personal obligation on a business loan. Doesn't end when the business sells — the founder stays on the hook until the lender formally releases them, on the lender's timeline.
WHY IT MATTERS
When a founder signs a personal guarantee on a business loan, they become personally responsible for the debt — not just the business entity. At exit, the guarantee doesn't automatically transfer to the buyer. The founder remains on the hook until the lender formally releases them, which requires paying off the loan, having the buyer assume the guarantee, or giving the lender written notice and waiting out their timeline. The release happens on the lender's schedule, not the deal's. Founders who haven't inventoried their personal guarantees before going to market discover the problem when the buyer's attorney asks for a complete list and the closing timeline doesn't align with the lender's release process. Credit cards with personal guarantees are the most commonly missed — founders don't think of business cards as guarantees, but the buyer's UCC search finds them.