Free Personal Guarantee Forms for Loan (Word | PDF)

A personal guarantee form for loan is a document that enables a person, known as a guarantor, to take responsibility for a personal loan if it’s not paid back by a borrower. As a borrower, it’s pretty easy to get a personal loan when you have a guarantor. Due to the risks posed by unsecured loans, some lenders might not typically approve a personal loan unless a borrower gets a guarantor who’s willing to take responsibility of their loan. In most cases, when the lender is not confident of the ability of the borrower to pay back the loan or the loan is huge, the lender might request a guarantor as security. Relatives, colleagues, and friends often sign as personal loan guarantors.

For credit issuers, having a guarantor sign a personal guarantee form provides them the assurance that they will be paid their debt. There are two major types of personal loan guarantees, namely:

Limited Guarantee

It allows creditors to collect either a definite monetary amount or a certain specified percentage of the principal’s remaining balance or the business owner. The limited guarantee applies when numerous principals will pay parts of the loan or debt.

Unlimited Guarantee

This type of personal loan guarantee necessitates that the principal receives liability for the full remaining balance. Personal guarantees required by the SBA fall under an unlimited guarantee. In this case, if a debtor, may it be a business or person, is unable to fulfill their commitments on loan with an unlimited personal guarantee,  then the lender can reach out to the principal to get the remaining balance.

The Objective of a Personal Loan Guarantee Form

A personal guarantee is, basically, a legal promise by an individual or an organization that they will repay any outstanding loan if the borrower fails to do so. This legal clause is meant to protect the lending institution in a situation where the borrower is unable to pay back the loan. Individuals with a limited or poor credit history might only qualify for a personal loan if they get a guarantor. For instance, an individual with a relatively low credit rating who is looking for a line of credit to help them cover unforeseen expenses might be required by the lender to look for a guarantor before the lender can issue them the line of credit. Mortgages, business loans, and car loans are all examples of personal loans where a guarantor might be needed to assume liability in case of default.

The guarantor will put up some assets as collateral to guarantee the loan. If the debtor makes loan payments promptly without defaulting, the guarantor will not owe any money to the bank or take any action. However, if the debtor cannot make the payments, then the guarantor will take on the responsibility of the outstanding balance. Apart from making the slated payments, the guarantor might also be asked to cover any interests or costs incurred due to the late payments of the borrower. If the guarantor can’t cover the remaining debt, the assets placed as collateral for the loan will be put on sale to cover the outstanding debt.

Who Needs this Form?

Personal guarantee forms are very common with certain organizations, groups, or individuals:

Trading Companies

Usually, trading companies enter into various types of business transactions with other organizations and will need a personal guarantee form or letter. They use the guarantee form to document that the entity will trade to personally guarantee that they will comply as expected based on the terms and conditions set in the agreement.

Additionally, the document specifies the State Laws that regulate both the guarantee and the agreement during the whole period of the transaction.

Lease Property Owners and Landlords

Owners and landlords of leased properties also use personal guarantee forms. This forms give the owner or landlord of the property assurance and documented proof that the tenant or renter has a guarantee who will pay any dues if they default their end of the bargain.

The form also provides general information about the guarantor, especially their contact details that landlords can use to contact them and send notices that contain the specifications of the unpaid rental payments.

Insurance Providers

Insurance providers use personal guarantee forms to record the applicant’s necessary information and the guarantor who will cover the payments if the applicant defaults their obligations to retain their insurance coverage. In this case, the applicant may have numerous guarantors.

The insurance providers also include in the agreement the terms and conditions that both the applicant and guarantor should agree to and follow. It is advisable for all the parties involved to read and understand the terms and conditions for them to conform.

Hiring Managers

The primary reason an organization uses personal guarantee forms is to clarify and verify its employment claims and background. The hiring manager uses the form to collect background information regarding the guarantor, applicant, and the previous company where the applicant worked. The personal guarantee forms also contain the guarantor’s assessment concerning the applicant’s performance and their strengths and commitments while they worked in the previous company. Therefore, the personal guarantee form serves as a reference document for the applicant’s character and application.

Contents of a Personal Loan Guarantee Form

The personal loan guarantee form outlines the loan balance in full and the specific state in which the loan was granted. Since the standards of lending do vary from one state to another, specifying the place the loan originated from will clarify its legal context as well as the explicit provisions that might carry on the loaning contract. Just like any other legal contract, a personal loan guarantee must indicate the parties involved and their addresses. It should also be signed, authenticated, and dated. Copies of the loan guarantee should later be given to the borrower, guarantor, and the lender.

Before agreeing to any form of personal guarantee, you should look at your finances and your business objectively, understanding the possibility that in spite your best intentions and efforts, there is a possibility that your business can fail. Carefully consider all the possible ways every provision within the contract could affect your finances and your business in the long run. In the end, you always ask yourself if the risk involved is worth the prize.


I/We, _____________ and _______________, residing at ____________________ and _________________________ (henceforth Guarantors), do herewith personally guarantee the due performance of ____________________ with regard to a contract (hereinafter Contract) between and by ________________ and __________________.

In the event that ______________ fails to make payments to ______________, or fails to discharge according to the said Contract between the two parties, the Guarantor do hereby guarantee to make full payment to ____________________ in the same way as if they were the original entities of the said Agreement.

And likewise, the Guarantor do now empower and authorize an attorney of any court of law in the state of ______________ or anywhere else to appear for and also enter judgment against any of us, or both of us. The judgment will be done in favor of _______________ for any outstanding amount under the Contract plus interest with the release of errors, suit expenses, without delay of execution. And with thirty and two-thirds percent (33 2/3%) as a realistic attorney’s cost, and the Guarantor now waives and also release all benefits and relief from all and any appraisement, exemption or stay laws of any state currently in force or passed in the future.
This personal guarantee is entered into during this day of ___________ day & month), ___ (year) IN WITNESS OF
_________________________________ ____________________
Signature Date
_________________________________ ____________________

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