Answers

Do I need a personal guarantee for business funding in Canada? A plain answer.

Often, yes. Most small-business financing in Canada, including bank loans, merchant cash advances and revenue-based financing, asks the owner to sign a personal guarantee. What it covers differs: a guarantee of performance under an MCA is usually narrower than a full guarantee of a loan balance. Read what you are guaranteeing.

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Do I need a personal guarantee for business funding in Canada?

Key facts

Banks usually guarantee the loan balance
MCA guarantees often cover performance, such as not diverting revenue
Read exactly what triggers the guarantee
Some funders limit the guarantee on renewals

Why funders ask for one

A small business and its owner are closely linked. A personal guarantee gives the funder a direct claim against the owner if the business breaches the agreement. For a bank loan, it typically covers repayment of the balance. For many merchant cash advances, the guarantee is of performance: that the owner will not divert receivables, close the business without notice or misrepresent information. If sales fall honestly, a performance guarantee is not meant to turn the advance into a personal debt, but read the exact wording.

What to check

Whether the guarantee covers payment of the balance or only performance obligations.
Whether it is limited to an amount or unlimited.
Whether your spouse or other owners must also sign.
What events trigger it, such as default, fraud or closing the business.
How it ends once the agreement is paid.

Reducing personal exposure

Keep business and personal finances separate.
Incorporate if appropriate, though guarantees still apply to small corporations.
Avoid signing guarantees for amounts the business cannot reasonably carry.
Get legal advice on unlimited guarantees.

Where Canadian files usually start

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

If your question is about your own file rather than the general rule, the fastest route to a specific answer is a review. Send a signed application and your last four months of business bank statements, mention this question in a note, and the response will address it directly. You can also call (305) 384-8391 and ask before applying; there is no cost to ask.

Questions owners ask next

Sources and review

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Can I avoid a personal guarantee?

Rarely for small businesses. Larger, established companies sometimes negotiate limits.

Is a performance guarantee the same as a loan guarantee?

No. A performance guarantee usually covers specific breaches rather than the balance itself.

Does incorporating remove the need?

No. Funders still ask owners of small corporations for guarantees.