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A personal guarantee is one person's signed promise to cover another's debt. Create this free template online or download the fillable PDF, with lines for guarantor, lender and borrower. Lenders ask for it, especially when they want a backup payer.
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A personal guarantee form is the document in which a guarantor promises a lender, in writing, to cover a borrower's debt if the borrower does not pay it. The promise comes from a person who did not receive the money, which is what gives the lender a backup.
Lenders ask for this document when they want more comfort before lending, or when they doubt the borrower can repay alone. A guarantor can also help a borrower whose loan request would otherwise stall.
Three people take part in a loan personal guarantee:
In this made-up example, Anna Baker asks a bank for a loan to open a bakery, and the bank would like a second person to back the loan. Anna's friend Ben Carter agrees to act as guarantor. Ben reads the loan agreement first, asks the bank how the loan terms work, and keeps a copy of everything he signs.
A personal guarantee works alongside the loan agreement: the borrower promises to repay the loan, and the guarantor promises to step in if the borrower stops paying or cannot pay.
A personal loan guarantee form does not replace the paper that creates the debt. The debt sits in a loan agreement or a promissory note, and the guarantee points back to it by naming the same lender and borrower.
A common order of events looks like this:
A personal guarantee puts the guarantor's own money at risk, because the lender can look to the guarantor when the borrower does not pay. The wording of the signed guarantee decides how far that goes.
For consumer credit, the Federal Trade Commission rule at 16 CFR 444.3 treats it as an unfair practice for a consumer lender or retail installment seller within the Commission's jurisdiction, as 16 CFR 444.1 defines them, to obligate a cosigner who has not first been told the nature of that liability. The notice printed in 16 CFR 444.3 opens with the words "You are being asked to guarantee this debt." It is a plain summary of what the promise can cost:
That notice is written for cosigners on consumer credit. A business loan or a private loan between people can work differently, so read what your own guarantee says about payment and collection.
If you are being asked to be a personal guarantor for someone, ensure that you trust them and you are willing to cover them if they need it. Work out whether you could pay the whole balance without the borrower's help.
Personal guarantees come in limited and unlimited forms, and the difference is how much of the debt the guarantor stands behind.
| Type | What the guarantor backs | Where it fits |
|---|---|---|
| Limited guarantee | A set dollar cap or a set share of the remaining balance | Several people each back part of the debt, or a guarantor wants a ceiling |
| Unlimited guarantee | The full remaining balance of the loan. For consumer credit, the 16 CFR 444.3 notice says late fees or collection costs can increase that amount, so the balance is not a ceiling. Check your own guarantee's wording for what it covers. | One guarantor stands behind the whole debt |
A limited personal guarantee protects the guarantor only as far as the signed wording says, so the cap belongs in the guarantee itself and not in a side conversation. The fillable fields of the FormsPal template cover the date, the parties, the state and the signature blocks, with no line for a cap.
If you and the lender agree on a limit, add that sentence with the FormsPal PDF editor before anyone signs. Read the rest of the template with the limit in mind, and ask a lawyer to check that the clauses fit together.
Example of cap wording, not advice for your loan: "The Guarantor's total liability under this Guaranty is limited to $10,000."
A personal guarantee comes up whenever a lender, supplier or landlord wants someone besides the borrower behind a debt, most often for small business credit and personal loans. Always make sure you know why the company is asking for a personal guarantee.
A personal guarantee form for business usually comes from a lender or supplier that wants an owner behind the company's debt, so the owner's own money stands behind a company obligation.
For SBA business loans, 13 CFR 120.160 says holders of at least a 20 percent ownership interest generally must guarantee the loan. When deemed necessary for credit or other reasons, 13 CFR 120.160 also lets SBA, or an SBA Lender acting under delegated authority, require full or limited guarantees from other appropriate individuals or entities, whatever their ownership share.
A supplier that sells on credit can put the same promise on its credit application. Read that page as closely as a loan guarantee, because its wording can reach every order on the account.
A personal loan guarantee form suits a loan from a person or a small lender when that lender wants a backup payer behind the borrower. Talk through what happens after a missed payment before anyone signs, because the talk is harder once a payment is late.
A landlord can ask for a guarantor so that someone stands behind the rent if the tenant falls behind on payments. The FormsPal template is written as a Loan Guaranty, so a tenancy calls for wording about rent, and our lease agreement forms are the place to start.
Before you agree to back a loan, ask the lender these questions, so you know what you are promising and who will hold your personal details:
A personal guarantee is the wrong paper when nobody is backing another person's debt, so check which of these you are really after:
A personal guarantee should include the date, the names of the guarantor, lender and borrower, the debt it covers, any limit, the governing state and the signatures. Read every part before you sign anything, and make sure you agree with the terms.
| Part | What it tells the reader | Where it sits in the FormsPal template |
|---|---|---|
| Date | When the guarantee is made | Dated line in the opening paragraph |
| Guarantor | Who makes the promise | Opening paragraph and the Guarantor signature block |
| Lender | Who receives the promise | Opening paragraph and the ACCEPTED AND AGREED block |
| Borrower | Whose debt is being backed | Recitals, before the words as the Borrower |
| State | Which state's law the guarantee uses | State of line in the governing law section |
| Signers | Who signed, by name and title | By, Name and Title lines in both signature blocks |
Loan details and contact details are not fillable fields of the FormsPal template, so keep them in the loan agreement or add them to the guarantee before signing. That covers the loan amount, the interest, and each person's mailing address, phone number and email address.
Before you hand over the finished form, check these points:
A personal guarantee letter states the same promise in letter form, addressed to the lender and signed by the guarantor. It is shorter than the form, so ask whether the lender will accept a letter or wants its own paper. Here is how one can read:
Sample only, with made-up names and figures. March 3, 2027.
To Example Lending LLC: I, Ben Carter, personally guarantee payment of the loan you made to Anna Baker under the loan agreement dated March 1, 2027, up to $10,000. If Anna Baker does not pay when the loan agreement calls for payment, I will pay the amount due after your written request.
Signed, Ben Carter, 12 Sample Street, Exampletown.
The steps below follow the FormsPal template, from the date at the top of the form to the lender's signature block on the last page. Have the names of everyone involved ready before you start.
The screenshots under each step show the FormsPal Personal Guarantee template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Once the personal guarantee template is filled in, the last steps are signing it and storing the signed pages where you can find them. Go through these steps in order:
The answer varies by state and Virginia Code § 11-2 covers only Virginia, so look up the rule of the state you name in the form or ask a lawyer there. In Virginia, Virginia Code § 11-2 says no action can be brought to charge a person on a promise to answer for the debt, default or misdoings of another, unless the promise, or some memorandum or note of it, is in writing and signed by the party to be charged or that party's agent.
Keep the signed pages together with the loan agreement and any information the lender gave you. A paper copy in a safe place and a scan on your device make it easy to find the financial paperwork later.
When the loan is paid off, ask the lender for a written confirmation that the guarantee has ended, and keep that page with the others.
Yes: use the button at the top of the page to create your form, answer a few simple questions about the loan terms and the people involved, then save or print the result. You can also download the PDF and fill it in with the FormsPal PDF editor.
Keep the loan paperwork next to you so it is easy to match each entry. Have these items ready:
It can: the notice in 16 CFR 444.3 says that if the debt is ever in default, that fact may become a part of your credit record. That notice is written for cosigners on consumer credit, so ask the lender whether it checks or reports the guarantee before any default, and how it reports other kinds of credit.
A guarantor can ask the lender for a written release, and whether you can get out depends on the lender, the wording of the guarantee and state law. Read the signed form first, then put the request in writing, and ask a lawyer in your state before you rely on anything less than a signed release.
Read it slowly from start to finish and write down your questions for the lender. If the draft is a PDF, you can ask questions about the PDF to understand the agreement first.
The template runs three pages and has 13 fillable fields. They cover the date, the parties, the state, and the signature blocks on the last page.
General information, not legal or tax advice.
