Getting Business Owners To Sign A Personal Guaranty

The easiest time to get a personal guaranty is when a business is first asking for credit. It is very easy to include this provision on a credit application as described in our free eBook, The Credit Application Handbook. Many business owners will sign a personal guaranty just because it is on the form.

Alternatively, a separate personal guaranty can be provided after the business’s credit has been evaluated. We provide over 20 examples in our free eBook, The Personal Guaranty Handbook.

Another good time to request a personal guaranty is when a business requests a higher credit limit. The hardest time to get a personal guaranty is once the business has fallen behind on its invoices. At that point, the business owner may be very reluctant to agree to become personally liable for the business obligations when their business is having cash flow problems.

Including a personal guaranty in your credit app increases the chances of it being signed


When the personal guaranty is part of the credit application, it often comes back unsigned. Some vendors insist on having a personal guaranty for all privately held companies.  Even if you don’t require it, simply asking one more time may result in getting a guaranty.

One credit manager uses the following language if the owner is balking:

“You are asking us to stand behind your corporation, we are asking you to do the same. If you lack the confidence in your business’s ability to pay, that tells us we shouldn’t either.“

While a personal guaranty does not ensure you will get paid, it can make it much more likely.  Per­son­ally guar­an­teed invoices have a higher priority in the guarantor’s mind than those that are not guaranteed. The guarantor knows that if the business fails, they want to minimize their remaining personal debts. Thus, while a business is still alive and generating some cash, invoices that are personally guaranteed are more likely to get paid than those that are not.

Even if the business cannot pay immediately, having a guaranty makes it more likely the guarantor will talk with the creditor or their collection agency. Most debtors owe multiple vendors, not just one. They are more likely to give time and information to creditors who have a guaranty to avoid having the creditor immediately escalate the matter. Often, this increased access will lead to getting more information that enables the creditor or debt collector to make better decisions on how to proceed.

Personal-Guaranty-Handbook2In addition to the 20 sample guarantees, the free Personal Guaranty Handbook includes:

  • Tips to get­ting more signed per­sonal guarantees
  • Guidelines for who should sign the guaranty
  • Over 20 items to con­sider includ­ing in the guaranty
  • Four legal pro­vi­sions that can make a huge dif­fer­ence in the event of default
  • Down­load­able Microsoft Word ver­sions to cus­tomize for your company


We collect more money and faster when our clients have personal guarantees. Adding as little as one sentence to your credit application or order form can help you minimize bad debt.

We share this advice because we care. The Kaplan Group exists only because we think every vendor should get paid on every valid invoice. Our clients who implement our recommendations send us fewer claims – that’s fine with us. When they do have a problem, then they really need our unique business and negotiation experience that results in an 85% success rate on large, viable claims. When our client has a personal guaranty, it helps us get the money they rightfully deserve.

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