Personal guarantee
Most advances ask the owner to sign something personally. What that something covers varies, and the difference matters.
✓ Checking what you qualify for does not affect your credit score.
At Merchant Fund Express, here is the short answer: A personal guarantee is an owner’s commitment to answer for certain obligations. Most advances ask for one of performance, with specific triggers. Read what triggers it.
A personal guarantee is an owner’s commitment to answer for certain obligations of the business if specific events occur. Read the glossary entry on personal guarantee for the short definition.
| Type | What triggers it | What it means |
|---|---|---|
| Guarantee of performance | Triggered by acts such as diverting sales, closing the business or changing the debited account | You are responsible for those acts, not for the revenue itself |
| Guarantee of payment | Makes the owner liable for the balance if the business does not pay | Closer to a loan guarantee |
Keep the account open and the debits flowing, notify the funder before changing banks or processors, and keep copies of every notice. See changing bank accounts. This is general information; have an attorney review the specific agreement.
An owner signs an advance without reading the guarantee and later closes her bank account to switch banks. The change is a trigger event under the agreement and the funder invokes the guarantee. A short call before the change, to notify the funder and move the debit, would have avoided it. The guarantee was never about revenue; it was about acts.
Source: Merchant Fund Express.
Many agreements include one. Terms vary by funder. Source: Merchant Fund Express.
It does not appear on your credit report unless a judgment or collection follows.
Sometimes. You can ask for the narrowest form.
The agreement sets what happens. This is where legal advice is worth the cost.
Merchant Fund Express gives a same-day decision. Applying takes a few minutes and will not affect your credit score.
