A promise by an individual to repay a business debt if the business cannot.
For example, when a small corporation applies for a $150,000 operating line of credit, the bank requires the 100% owner to sign a personal guarantee, accepting personal liability for the debt in case the company is unable to repay — giving the lender recourse beyond just the company's assets.
Why it matters: It bypasses the corporate shield, meaning the business owner’s personal assets (like their home or savings) are on the line if the business defaults.
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