What is a “Guarantor” on a business loan and what are the pros and cons of being one?
Being a Guarantor on a loan means that you are personally responsible for this debt if the business cannot pay. When you are a new business or do not have any business credit most lenders will require the business owner or president to personally guarantee the loan if the business cannot be paid. The cons are that if the business cannot pay the debt then the Guarantor is the next in line for responsibility on the loan. There are not a lot of pros other than you are showing a commitment to the business and will personally guarantee the payments will be made on time, which will make it easier to get a loan. Some business cannot get a loan because the owner or president will not guarantee the loan.
