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Personal Guarantee Form (Examples & Templates)

More often than not, you may have been asked to be a guarantor as a condition in the application for a loan or commercial lease. Businesses might require loans to fund their operations. However, with poor credit, they cannot secure crucial funding. If the business owner cannot repay the facility, the guarantor agrees to use their assets, such as home, vehicle, or bank account balance, to repay the debt or obligation. A guarantor gives the lender additional security and may enable the borrower to negotiate a better deal. When someone wishes to aid a borrower secure financing, they can use a personal loan guarantee form.

An individual who signs a personal guarantee form will assume the debtor’s obligation to repay the remaining balance in case of default. This article discusses personal guarantee forms, when they are required, who can use them, and what to include. Free downloadable templates have also been provided.

Download Free Templates

Following are the personal guarantee form templates for you:

Loan application form for employee-01

Guarantee Form-02

    Statistical Insight: According to a survey conducted by the National Small Business Association, 71% of respondents reported using their own funds to bankroll their new businesses. 43% of respondents who tried to apply for business loans were asked to give a personal guarantee.

    What are Personal Guarantee Forms?

    A guarantee is a legally binding agreement in which a guarantor pledges to assume the obligations or make the payments on a facility if the borrower defaults. Having a guarantee benefits the applicant since they now qualify for a loan they might not have been able to. Conversely, the lender is sure their loan is secure since they are confident the money will be repaid.

    There are two types of guarantees that can be provided to secure loans and commercial leases; a personal guarantee and a corporate guarantee. The distinction between them lies in who is liable for repaying the facility. For a personal guarantee, an individual agrees to assume the debtor’s obligations by listing their assets, such as vehicles, property, or bank account balance, as security. For a corporate guarantee, a business assumes payment obligations with their assets or income should the debtor fail to service the facility.

    A personal guarantee form is a legal document that enables a guarantor to be held accountable for borrowed funds in the event the borrower fails to repay it. The form can also guarantee a lease if the tenant defaults on rent or other rental agreement terms.

    This form can also be referred to as a:

    • Corporate guarantee
    • Personal guarantee
    • Third-party guarantee
    • Guaranty
    • Guaranteed loan
    • Co-signing

    It authorizes the creditor to seize the guarantor’s assets if the debtor cannot repay the facility. The document also provides them with an additional safeguard, giving them peace of mind as they are sure the liabilities of the debtor will be met.

    Limited Vs. Unlimited Personal Guarantee

    Guarantee forms can be viewed as secured or unsecured debt, depending on the terms of the agreement. If the facility is backed by the borrower’s assets, it is considered a secured debt. For unsecured debt, the facility is not backed by the borrower’s assets and in the event of a default, all liability falls on the guarantor.

    If a borrower fails to repay a facility, the guarantor might do so in two different ways:

    Limited personal guarantee

    This allows the lender to receive money from the guarantor as a fixed amount or a certain percentage of the outstanding balance. They usually contain a clause that limits the amount the guarantor can be held accountable for. A limited personal guarantee applies in cases where multiple guarantors make partial payments on the debt.

    Unlimited personal guarantee

    The entire outstanding sum becomes the guarantor’s responsibility.  When a borrower with an unlimited guarantee cannot repay the loan, the creditor seeks the guarantor to obtain payment for the entire remaining balance. Since it offers more security, an unlimited personal guarantee accords the creditor greater assurance but can be detrimental to the guarantor, as it exposes them to potentially unlimited liability if the borrower defaults.

    Did You Know: A report by the New York Times disclosed that by 2018, former United States President Donald J. Trump had personally guaranteed loans totaling $241 million.

    What are the Parties Involved in a Personal Guarantee Form?

    The parties in a personal guarantee each have a duty to carry out particular obligations under the terms of the agreement.

    Below are the parties listed on the form:


    This is the individual who ensures that the loan will be paid back if the borrower is unable to do so. A guarantor can be a business owner or company executive who legally agrees to use their assets as security should the borrower default.


    This is the party to whom an obligation, i.e., a loan, contract, or lease, is owed under the terms of the initial agreement. This is the party that extends a line of credit to the borrower. This may be a bank or any other financial institution, and can also be referred to as the creditor.


    Also referred to as the debtor, this is the party initially required to fulfill the obligation, i.e., repaying the loan, under the original agreement. Usually, a borrower can be a new or existing business, or an organization seeking finances to fund their operations.

    Typically, the principal duty of these parties is to ensure the money is repaid. After reaching a compromise, the legal process follows, during which the agreement is drafted as per local, state, and federal laws.

    Common Situations When a Personal Guarantee Form is Required

    The following situations usually warrant the use of personal guarantee forms:

    Lease agreements

    Lease parties such as landlords and owners of commercial properties frequently require personal guarantee forms. With the form, the owner or the property has documented evidence that the lessee has a guarantor who will cover the outstanding payments in the event of a default or non-payment. 

    The form usually includes the following:

    • Leasor and lessee information
    • Effective date
    • Recovery terms

    Did You Know: According to a survey by the National Association of Realtors, 58% of commercial lessors require a personal guarantee before renting out a property.

    Commercial loans

    Lenders usually require a personal guarantee form to approve a commercial loan for an existing business. To lower their exposure to financial loss in the case of a default, the lender can pursue the guarantor’s assets to offset the balance. Often, the person guaranteeing the loan is one of the executives or principals of the business seeking the loan.

    Business loans

    New businesses typically lack the creditworthiness to secure a loan to finance their operations. A personal guarantee form is required by lenders when a business applies for a loan. The guarantor agrees to take on the financial responsibility for the obligation if the business cannot make payments in time.

    Equipment financing

    Lenders commonly need personal guarantees to finance the purchase of equipment and assets, particularly for new businesses that might not have strong credit histories. Often, the loan cannot cover the value of the equipment being financed. Therefore, a personal guarantee form is required as a security measure if the borrower cannot fulfill contractual obligations.

    What to Include in a Personal Guarantee Form

    The core of a personal guarantee is your willingness to act as a guarantor and assume responsibility for the loan if the debtor cannot repay it. According to the form, you are bound by the same terms and conditions as the borrower, including an unpleasant situation if they default. Financing requirements differ from state to state. 

    However, the following elements are essential and should be included in a personal guarantee form:

    Identification of parties

    Begin the form by identifying the parties involved in the agreement. Specify the date followed by the names, physical addresses, and contact details of the lender, borrower and guarantor in the format shown below:

    This Personal Guarantee (“Guarantee”) made on [Date] is by:
    [Guarantor Name] of [Physical Address] (“Guarantor”) agrees to personally guarantee a [Loan/Lease/Contract] by:
    [Borrower Name] of [Physical Address] (“Borrower”) receiving a [Loan/Lease/Contract] by:
    [Lender Name] of [Physical Address] (“Lender”) that accepts the terms of this Guarantee.
    The Guarantor, Borrower, and Lender shall be collectively referred to as the “Parties” herein.

    Description of obligation

    Next, outline the details of the obligation being guaranteed.  Mention the guarantee being provided, including the terms of the agreement and the length of the guarantee. Outlining these details ensure both parties know their responsibilities and understand what statutory provisions are in place.

    For example:

    This Guarantee pertains to a [Loan/Lease/Contract] made on [Date] in line with [Terms]. In consideration of the Lender’s agreement to extend credit to the Borrower, The Guarantor agrees to be jointly liable with the Borrower for the full payment of any and all amounts owed by the Borrower to the Lender under the Loan.

    Guarantee amount

    Next, include the maximum dollar amount you are liable for if the borrower defaults on the obligation. The guarantee amount may be equivalent to the full amount of the obligation or a percentage of the total amount. For example, you may agree to guarantee 50% of the loan amount, which should be mentioned on the form. 

    The guaranteed amount may be presented as:

    This Guarantor is liable for $[Amount] (“Money Borrowed”) under the terms and conditions of the agreement (the “Agreement”).

    Duration of the guarantee

    Specify the time frame during which you will be responsible for ensuring the borrower complies with the terms of the obligation. This is often specified in the conditions of the agreement and may be a specific number of years, months, or until the obligation is completely repaid. You can be compelled to repay the entire credit amount and any associated charges if the borrower defaults during this time.

    You may present this section as:

    The guarantor hereby guarantees the full payment of all obligations of the borrower under the original agreement for a period of [Duration], commencing on the [Date].

    Payment terms

    Describe the conditions under which you must make payments if the borrower defaults on their obligations. These payment terms might encompass:

    • frequency of payments
    • mode of payment
    • associated fees

    Before signing the form, you should thoroughly understand the payment terms. You should be able to meet all the payment obligations and be aware of the repercussions of nonpayment.

    These terms may be presented in the format shown below:

    The Guarantor is hereby subject to the following payment terms:
    [Term 1]
    [Term 2]
    [Term 3]

    Default and enforcement provisions

    This section should outline how the lender will enforce the guarantee in the event that the borrower defaults on their obligation. These clauses are intended to safeguard the lender’s interests and ensure that you fulfill your responsibilities. 

    These provisions might include:

    • Notice of default: A written notice to you of the borrower’s default within a specific time frame with the lender’s knowledge of the default.
    • Remedies: Rights to enforce the guarantee and take any action necessary against you to recover the outstanding debt, including legal action and repossession proceedings.
    • Guarantor’s liability: The full amount of the outstanding debt, as well as any associate charges.
    • Waiver of rights: Certain legal protections that you will relinquish to provide additional security to the lender.

    Governing law

    List the laws that will influence how the guarantee is interpreted, considered legitimate, and executed. These laws are specific to the jurisdiction in which the agreement is enforced. This provision is vital since it aids in addressing any potential uncertainties that may develop when the guarantee is enforced.

    This clause may be presented as:

    This Guarantee shall be executed in accordance with the laws of [State]. The Parties irrevocably submit to the sole jurisdiction of the courts of [State] in respect to claims arising out in relation to this Guarantee.


    The form should be signed by all parties involved as it is a legally enforceable document. By providing their handwritten signatures, the parties acknowledge that they have read, understood, and consented to the terms of the agreement. The document must also be signed in the presence of a witness, whose signature must also be included.

    This final section may be presented as:

    The Parties herein agree to the terms of this Agreement as of the date first above written.
    Name: ________________
    Signature: ________________
    Date: ________________
    Name: ________________
    Signature: ________________
    Date: ________________
    Name: ________________
    Signature: ________________
    Date: ________________

    Note: The process outlined above may seem complex. We also have a collection of customizable personal guarantee form templates that you can download for free. They are easy to modify and have all the necessary elements to save you time.

    How Enforceable is a Personal Guarantee?

    In the past, courts have ruled that when a guarantor assumes liability for a borrower, the agreement turns into a formal, distinctive contract the lender can enforce. In special cases, however, the guarantor may enforce the terms of the personal guarantee should the borrowing party breach them. As compared to corporate guarantees, personal guarantees are easier to enforce legally as it is simple to justify their legal creation and obligations. 

    The enforceability of a personal guarantee is determined by several factors, including the terms of the agreement, governing law, and the jurisdiction in which the agreement was made. They are generally actionable as long as they meet the legal requirements for a valid contract. Therefore, the terms of the guarantee should be unambiguous, and the guarantor must have the legal and financial capacity to enter the agreement. However, the guarantee may be deemed invalid if one entity claimed forgery, coercion, or fraud when entering the agreement. A court may also refuse to enforce the guarantee if it deems the terms unconscionable and biased.


    A personal guarantee form guarantees lease agreements, commercial loans, business loans, and equipment financing. The form contains the names of the parties, the duration of the guarantee, the amount guaranteed, and the terms surrounding the agreement. A guarantor, lender, and borrower are all parties to the guarantee form. With the signed form, the guarantor is liable for all payments should the borrower default on the facility. The lender benefits since the guarantor assumes the borrower’s responsibilities should they fail to fulfill their obligations.

    The guarantor and debtor are equally liable for the facility, which means they can be held accountable for the entire amount owed under the original agreement. The guarantor cannot initiate legal action against the borrower in the event of a default. However, they may seek compensation if they make a payment under a personal guarantee. This has the added disadvantage of endangering the relationship between the debtor and guarantor. Before signing the form, the guarantor must consider the implications of not upholding the agreement.

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