Personal Guarantee

July 23, 2013

July 23, 2013

You are in: Home » Blog » Personal Guarantee

Categories

A personal guarantee is when one of the owners or principals of a business extends his/her personal credit to back up liabilities incurred by the business such as business loan.  Corporations in the US and most other countries have limited liability for the owners.  That limited liability was an important legal innovation because it allowed large groups […]

46 Seconds to Discover Thousands of Wasted Dollars in your Business.

82% of companies find $12,000 wasted annually. How much are you losing?

nexus-feefighters-quiz-saving-money
A personal guarantee is when one of the owners or principals of a business extends his/her personal credit to back up liabilities incurred by the business such as business loan.  Corporations in the US and most other countries have limited liability for the owners.  That limited liability was an important legal innovation because it allowed large groups of investors to invest in a company and not risk losing anything more than their original investment.

How likely would you be to buy stock in a company like Microsoft or GE if there was a risk (even a small risk) that you could lose more than you originally invested?  Not likely, which is why limited liability makes a lot of sense for widely held companies.

However, when a business is small, closely held. and doesn’t have an established credit score, other parties are often hesitant to enter into contracts or credit arrangements unless the owner(s) put his/her/their personal credit on the line as well.   For example, the owner of the business could take out a loan in the name of the business, pay himself the proceeds of the loan and then walk away from the business.  It would be difficult for the creditor to get its money back since it would be sheltered by the legal status of the business (they could sue the business and the business owner for fraudulent conveyance, but that would be expensive).

Reduce Credit Card Processing Fees

with FeeFighters

Recent Posts

Chargebacks are debit or credit card charges that have been disputed by customers. Sometimes these come in the form of chargeback fraud, but other times they are legitimate. When a chargeback happens, you have to deal with the acquiring bank and other entities in order to dispute it. Regardless of the reason for any given […]

Stripe is one of the world’s most popular options for credit card processing, payment gateways, and merchant accounts for business owners. But how does Stripe make money on the services they provide? Fees One of Stripe’s primary sources of revenue comes through the fees they collect from merchants. We’ll discuss these first. Credit Card Processing […]

Stripe and PayPal are known as two of the most user-friendly and versatile merchant account and payment gateway providers available. When it comes to payment processing partners, they are two of the top choices for small business owners. However, one common question from merchants is whether or not Stripe can payout revenues to their PayPal […]

The transportation and moving industry has unique needs when it comes to merchant services like payment processors, merchant accounts, and POS systems. This article will talk a little bit about what your merchant services options are if you own a transportation company, along with some special considerations and potential roadblocks you might encounter. Let’s get […]

© 2019 – FeeFighters, LLC – Call Us – (646) 448-8804

PO BOX 1459, MOUNTAINSIDE, NJ 07092