A personal guarantee agreement is a legal document that is used to prove that an individual is willing to take responsibility for a loan, debt, or any other financial obligation. In this agreement, the individual guarantees that they will repay the debt in case of default. A personal guarantee agreement is often required by financial institutions when providing loans or credit to small businesses.
If you are in the process of setting up a small business, you may need to provide a personal guarantee agreement to your lender. To help you get started, we have provided a sample of a personal guarantee agreement below:
PERSONAL GUARANTEE AGREEMENT
This Personal Guarantee Agreement (the “Agreement”) is made on [DATE], by [GUARANTOR NAME] (the “Guarantor”), in favor of [LENDER NAME] (the “Lender”).
WHEREAS, Lender has agreed to provide [LOAN AMOUNT] to [BORROWER NAME] (the “Borrower”) to be used for the purpose of [PURPOSE].
WHEREAS, the Lender requires a guarantee from the Guarantor to secure the loan provided to the Borrower.
NOW, THEREFORE, the Guarantor agrees as follows:
1. The Guarantor hereby guarantees to the Lender the full payment of the loan amount provided to the Borrower.
2. The Guarantor agrees to pay the full amount of the loan, including any interest, fees, and other charges, in case the Borrower defaults on payment.
3. The Guarantor acknowledges that this guarantee shall continue until the loan is fully repaid and released from all obligations under the loan agreement.
4. The Guarantor agrees that this guarantee is a continuing and irrevocable obligation, which means that it shall not be discharged, changed, or terminated unless approved by the Lender in writing.
5. The Guarantor acknowledges that any delay or failure to enforce any provision of this guarantee shall not waive the right of the Lender to enforce such provision in the future.
6. This Agreement shall be governed by and construed in accordance with the laws of the state of [STATE], and any legal action arising out of or related to this Agreement shall be brought in the courts of [STATE].
IN WITNESS WHEREOF, the Guarantor has executed this Personal Guarantee Agreement as of the date first written above.
In conclusion, a personal guarantee agreement is a critical document that helps to secure loans and credit provided to small businesses. It is important to carefully review and understand the terms of the agreement before signing it. It is also advisable to seek legal advice to ensure that the agreement meets your needs and protects your interests.