Guarantor
A person or entity that agrees to be personally or corporately responsible for repaying a loan if the primary borrower fails to do so.
A guarantor’s role is to give the lender an additional source of repayment beyond the business itself, and depending on the guarantee’s terms, a lender may be able to pursue the guarantor directly for the full remaining balance in a default.
Most small business loans that require a personal guarantee name the business owner as guarantor, though a guaranty can also come from another individual or a separate corporate entity depending on how the deal is structured.
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