This Clause Makes You Personally Liable for Your Business Debts

Personal-guarantee clauses pierce the corporate veil and put your own assets on the line. Watch for these in leases, loans, and vendor agreements.

A personal guarantee removes the protection your company was formed to provide. If the business cannot pay, the creditor may pursue your savings, your car, and sometimes your home.

Guarantees hide in commercial leases, equipment financing, vendor credit applications, and loan papers. The signature block is the tell: your name appears twice, once for the company and once for you.

If the guarantee cannot be removed, limit it. Cap the dollar amount, set an end date, and exclude anything the business takes on after you have left it.