Personal guarantee

Lenders require guarantees because a newly acquired small business has no track record under its new owner. The guarantee is what converts an unproven borrower into an acceptable credit risk, and refusing to give one usually means the loan does not happen.

What people get wrong about it

• A guarantee usually survives the sale of the business — selling does not automatically release you
• Guarantees are often joint and several, so one guarantor can be pursued for the whole amount
• They frequently extend to renewals and increases, not just the original advance
• A landlord guarantee on a lease is separate from the lender guarantee, and each needs its own release

Getting released

Release is a negotiation, not a right. It typically requires the lender to be satisfied with the replacement borrower, and it must be documented in writing — a buyer’s assurance that they will "take over the loan" has no effect on the lender. A seller who does not obtain a written release can remain exposed for years after handing over the keys.