You can use our template to create either a Personal Guarantee (where the guarantor is an individual) or a Corporate Guarantee (where the guarantor is a corporation). You can make both types into a limited guarantee, in which the guarantor determines the amount they pay if the debtor defaults. Personal Guarantee Personal guarantees suit situations where the debtor has poor or no credit. For instance, someone’s parents may sign a Personal Guarantee to help their son or daughter secure a home loan. A company director may also use a Personal Guarantee when seeking funding for their business. Depending on the company’s structure, a director may not be liable for the business’s debts or liabilities. However, by signing a guarantee, the director bypasses their limited liability and takes personal responsibility for the debt. Corporate Guarantee Corporate guarantees suit business development situations where a company takes out a significant loan from a bank or money lender. A small business that needs capital might also strike a deal with a larger company to be the corporate guarantor on a loan. Limited Guarantee A limited guarantee lowers the guarantor’s risk by limiting their liability to a predetermined amount. This way, if the debtor defaults, the guarantor only has to pay the amount outlined in the Personal or Corporate Guarantee. If the lender is a financial institution, it may have a formula for calculating a limited guarantee. Otherwise, use your best judgement when determining the amount a guarantor should be responsible for in the event of a default.