Personal guarantee

Definition

Your promise to repay the loan personally if the business cannot.

Why It Matters

It is the emotional threshold of self-funded search, and a legal one: sign it and the house and savings are, in a real sense, in the deal. Every owner of 20% or more signs, so it cannot be structured away, which is why the default-rate data reads as careers, not statistics, and why the business you pick matters more than any clause. The spouse question has a published answer too. A spouse who owns any share signs in full once the couple's combined stake reaches 20%, and a non-owner spouse cosigns the collateral documents instead, which is how the jointly owned house enters the file.

In numbers: On a $900,000 7(a) loan, every owner of 20% or more signs personally: if the business fails owing $600,000 after liquidation, that balance follows the guarantors' houses and savings, which is why the charge-off data reads as careers, not statistics.