Personal guarantee explained
Don't sign blind.
A personal guarantee makes you personally liable for a business debt. Common in commercial leases and small-vendor contracts. The negotiation is around scope: term, dollar cap, good-guy carve-out, and survival.
No account requiredFile deleted after analysisNot legal advice
What it usually means
A personal guarantee makes the signer (often the business owner) personally liable for the contract obligations. If the business cannot pay, the landlord or vendor can pursue personal assets.
Why it matters before signing
An unbounded personal guarantee can convert business risk into personal exposure. Scope matters: full versus capped, term-of-lease versus until specific events, and whether a good-guy clause limits liability after surrender of premises.
What to ask before signing
- Is the guarantee capped at a dollar amount or a number of months?
- Does it cover the entire term, or just until specified events?
- Is there a good-guy clause that limits liability after surrender?
How Dang catches it
Dang flags personal guarantee language across commercial leases, vendor contracts, and some employment contracts. Severity HIGH; finding includes the entity guaranteed and any cap detected.
Frequently asked questions
Should I sign a personal guarantee?
Often unavoidable for small-business commercial leases and small-vendor contracts. Negotiate scope: cap, term, good-guy carve-out.
What is a "good-guy clause"?
A clause limiting personal liability if the tenant surrenders the premises in good condition with proper notice. Common in commercial leases.
Can a personal guarantee survive bankruptcy?
Often yes, depending on jurisdiction and the form of bankruptcy. Worth specific advice from a licensed attorney.
Sources & further reading
- U.S. Small Business Administration · commercial-lease basics
- U.S. Courts · bankruptcy basics
No account required · File deleted after analysis · Not legal advice. Dang reports contract findings in plain English. For consequential decisions, consult a licensed attorney in your state.