Guarantor

In small business lending, the guarantor is almost always the business owner or majority owner via a personal guarantee. However, a guarantor can also be a third party, a parent company, a business partner, or a creditworthy co-signer, whose stronger financial profile supports a loan that the primary borrower could not obtain alone.

Lenders evaluate the guarantor's personal credit, net worth, liquidity, and existing personal debt when underwriting the guarantee. A guarantor with a 780 FICO and low personal debt load can meaningfully improve offer terms even when the business's own profile is thin. Note: guarantors are liable even after business bankruptcy, the guarantee survives the entity.