Personal Guarantee
A promise by the business owner to be personally responsible for the obligation if the business cannot pay.
A personal guarantee (PG) is the owner’s promise to stand behind the business’s obligation. If the business cannot satisfy the funding, the guarantee lets the funder look to the owner personally. It is extremely common in small-business funding — even in products marketed as "no collateral," because a PG is a promise to pay, not a pledge of a specific asset.
Guarantees vary. A performance guarantee may hold the owner responsible only if they breach specific terms (like diverting sales or shutting down to avoid remittance), while a broader personal guarantee can reach the owner for the full obligation. The language matters, so read exactly what triggers it.
A PG is not the same as taking out a personal consumer loan, and it does not by itself pledge your house. But it does connect your personal finances to the deal, which is one more reason to size funding against realistic revenue and confirm the total payback before you sign.
Frequently asked
Does a personal guarantee mean I am pledging collateral?
Not necessarily. A personal guarantee is a promise to be responsible for the obligation, not a pledge of a specific asset like a UCC-1 lien or a mortgage. The exact reach depends on the guarantee language.
Is a personal guarantee the same as a personal loan?
No. The funding is still commercial and for a business purpose. A PG simply means the owner backs the business obligation if the business cannot pay.
Can I get funding without any personal guarantee?
Some products limit the guarantee to performance-based triggers, but a full or performance PG is common in small-business funding. Read what triggers the guarantee before you sign.
Related terms
A clause where a business owner pre-agrees to a court judgment on default, waiving the right to contest it first.
A public notice a funder files with the state to record a security interest in your business assets or receivables.
The requirement that funds be used for commercial purposes, not personal or household use — central to commercial financing.
A financing structure where a funder buys a set amount of your future sales at a discount today — a sale, not a loan.
How long your business has been operating, usually measured from formation or first revenue — a core eligibility signal.
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