If you’ve ever applied for a small business loan, you might have been asked to provide a personal guarantee. A personal guarantee reduces a lender’s risk associated with a small business loan because it gives lenders the right to pursue your personal assets if your business defaults on its business loan. It’s important you understand the nature of a personal guarantee and what it could mean for you and your personal finances.
A personal guarantee is just what it sounds like. It gives your lender the right to pursue your (the guarantor) personal assets if your business defaults on a business loan.
By agreeing to a personal guarantee, you (the guarantor) are agreeing to be 100% personally responsible for the entire loan amount, in addition to any collection, legal or other costs related to the loan.
Does OnDeck Require a Personal Guarantee?
For many small business owners, it’s likely a personal guarantee will be a part of any small business loan. And yes, like many lenders, OnDeck requires a personal guarantee.
If you’re unsure of any loan documents, including those pertaining to a personal guarantee, consult a trusted advisor or you attorney to make sure you understand what is required and how that could impact you and your business.