Although many dealers have never signed a personal guaranty for a lease or a loan, many more dealers do sign them. If you are going to sign one, here are a few things to keep in mind:
DO: Ask for a loan of over $10 million or more if you need anything close to that. They are easier to get than smaller loans, especially without a personal guaranty.
DO: If your lender insists on a personal guaranty and you have another entity, offer the other entity as a guarantor rather than signing yourself.
DON’T: If the lender insists on having you sign, don’t allow your spouse to also sign a guaranty.
DON’T: If you are signing personally, don’t allow your house or car to be at risk. Carve your house and car out of the personal guaranty.
DO: If you sell your business, consult with your attorney about how to make sure you are removed from the guaranty, otherwise, depending on the facts and circumstances and the kind of guaranty you signed, you may be surprised later to get a call asking for payment if the buyer defaults.
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