If you get a loan from a bank or private lender for your business, you will probably be asked to sign a personal guarantee that puts your own assets — such as real estate, savings, or other valuables — on the line should your business be unable to pay the bank back. Many business owners are so relieved to get the loan that they don’t read the fine print that puts them at risk. You should. And, you should attempt to negotiate.
To be sure, not every entrepreneur will be successful in negotiating the terms of the personal guarantee, especially if you’re just starting a business. “Those that will be most successful will be those who have three to five years experience and have survived this most recent [credit] crisis,” says Jim Coughlin, the chief underwriting officer for Asterisk Financial, a personal guarantee insurance company