Unless you’ve received some sort of windfall or have another source of cash, you’re going to need money to fund a new business. The easiest and most readily available source of cash is a business loan, a reasonable step to take for a start-up.

 In business lending, a personal guarantee is a very crucial element. It is a legal promise by the owner or owners of a business that in case a business fails to repay a loan, they will personally repay the outstanding debt. Although a loan can help to fund your business, in most cases, personal finances can end up being dragged into the picture in the form of personal guarantee. The banking institutions or other parties that lend money often demand a personal guarantee from the borrower to ascertain that the loan will be repaid even if the company does not have assets that assure repayment on its own.