I have reviewed a lot of leases, loan documents, and vendor agreements over the years. One clause shows up more often than owners expect: the personal guarantee.
A personal guarantee means you, as an individual, are on the hook if your business cannot pay. Your LLC or corporation does not shield you from that obligation, because you agreed to step outside the entity and stand behind it yourself.
1. It overrides your entity protection, by design
The whole reason a landlord or lender asks for a personal guarantee is to get around the liability protection your entity otherwise provides. They know the LLC limits their recourse, so they ask you to waive that limit voluntarily.
Once you sign, the entity's protection is still real for other creditors. It just does not apply to this particular debt.
2. Not all guarantees are the same size
Some guarantees are limited, covering only a portion of the debt or a set time period. Others are unlimited and continue for the life of the obligation, sometimes even after you sell your interest in the business.
I generally encourage clients to negotiate for a capped or declining guarantee whenever possible, especially on long-term leases. A guarantee that shrinks as you build a payment history is far better than one that never changes.
3. Watch for "joint and several" language
If you have partners who also sign, look closely at whether the guarantee is joint and several. That phrase generally means the creditor can pursue any one guarantor for the full amount, not just their proportional share.
In practice, that means your personal exposure may not be limited to your percentage of ownership. It can be limited only by the total debt itself.
4. Guarantees can survive changes to the underlying deal
Many guarantees are written to cover renewals, modifications, and extensions of the original agreement, not just the initial terms. That means a lease renegotiated five years from now could still be backed by the guarantee you signed today, even though you were not part of that later conversation.
It is worth asking whether the guarantee terminates when the original term ends, or whether it automatically extends.
5. Read it before you need a lawyer to explain what you signed
I understand the instinct to skim a guarantee and get to closing. But this is one document where the details genuinely matter, since it can put your house, your savings, and your personal credit at risk.
Having someone review the language before you sign is usually far less costly than trying to unwind or dispute it later.
If you are being asked to sign a personal guarantee and want a second set of eyes on it first, reach out through blgattorney.com or call my Oklahoma City office. A conversation early is almost always cheaper than a problem later.