Find Me Funders
Whether the personal guarantee survives closing the business
Generally yes, and the reason is structural: the guarantee is a separate contract, and most are drafted so the borrower's disappearance is the event they were written for.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
Does my personal guarantee survive if I close the business?
Generally yes. A guarantee is a separate contract between you and the creditor, not an obligation of the business, so dissolving the entity does not discharge it — and most commercial guarantees are drafted specifically to survive the borrower's insolvency, dissolution or bankruptcy. Typical language makes the guarantee unconditional and continuing, waives the requirement that the creditor pursue the business first, and waives the suretyship defences that might otherwise apply. What does end it is payment in full, a written release from the creditor, or the expiry of the applicable limitation period, and each depends on the wording of the guaranty and the law of the state it selects.
Closing the business removes the primary obligor and leaves your guarantee exactly where it was. That is not an accident of drafting; it is the situation the document was written for. Your promise to answer for the business's obligation sits in your own contract with the creditor, and the entity's disappearance is the event that makes it useful to them.
The four words that do the work
Read your guaranty for these.
Together these mean the creditor can come to you directly, immediately, without suing the business, without liquidating collateral, and without the business still existing.
The waivers
Below the operative language sits a list of waivers, usually a long paragraph in smaller type. Typical items:
- Waiver of notice of default, of acceptance, of presentment and of dishonour
- Waiver of any requirement that the creditor proceed against the business or the collateral first
- Consent in advance to modifications, extensions and releases of collateral without notice to you
- Waiver of suretyship defences, including the defence that the creditor's own conduct increased your risk
- Waiver of subrogation rights until the creditor is paid in full
- Sometimes a waiver of jury trial, and a venue or jurisdiction clause
The third of these is the one that surprises people. It means the creditor can restructure the business's obligation, extend it, or release collateral, and your guarantee follows the modified obligation — without your consent and without notice.
What actually ends a guarantee
What joint and several liability does to the arithmetic
A creditor is not obliged to split the claim. It can pursue either guarantor for the full $50,400, and will typically pursue whichever one has reachable assets. If guarantor A pays the whole amount, A's claim for $25,200 against B is a separate matter between the two of them — a contribution claim A has to bring, fund and collect, against a co-owner whose business has just failed.
So the practical exposure of a 50% owner under a joint and several guarantee is not 50% of the debt. It is 100% of the debt, plus the cost and uncertainty of recovering half of it from somebody else.
What does not end it
- Dissolving or administratively closing the entity
- Selling the business, unless the creditor signs a release
- A buyer agreeing to assume the debt, unless the creditor signs a release
- The business's bankruptcy — the guarantee is usually preserved, and the automatic stay protects the debtor entity rather than a non-filing guarantor
- Time passing without contact from the creditor
- A funder being acquired or transferring the position to someone else
The practical question underneath
For most people the real question is not whether the guarantee survives but what happens next. The usual sequence is a demand letter, then a suit on the guarantee, then a judgment, then enforcement — and what enforcement reaches, what is exempt, and how long a judgment lasts are all matters of state law that vary widely.
Two things are generally true across states. A creditor holding a judgment against someone with no reachable assets has an asset of limited value, which is why many creditors will discuss a settlement with a guarantor who engages early and presents a complete picture. And a guarantor who goes silent usually gets the full sequence, because silence removes the creditor's alternatives.
What to do
If you are closing a business, list every guarantee you have signed — funder, date, agreement, and whether anyone else signed as co-guarantor, since joint and several liability means a creditor can pursue any one guarantor for the whole amount. Read each for a cap or a sunset. Contact the creditors before they contact you, with an honest picture of what the entity has. And separate the guaranteed obligations from the trust fund tax exposure, because the second follows you regardless of what any contract says.
If you are paying a position off, ask for the written release now, while you have leverage.
Whether a particular guarantee survives, what defences exist, what enforcement can reach and what limitation period applies all depend on the wording of your guaranty and on the law of the state it selects. This is general information about how these documents are usually drafted, not legal advice, and a called guarantee is a situation to take to a lawyer.
Where this applies
Related questions
Does my personal guarantee survive if I close the business?
Generally yes. A guarantee is a separate contract between you and the creditor, not an obligation of the business, so dissolving the entity does not discharge it — and most commercial guarantees are drafted specifically to survive the borrower's insolvency, dissolution or bankruptcy. Typical language makes the guarantee unconditional and continuing, waives the requirement that the creditor pursue the business first, and waives the suretyship defences that might otherwise apply. What does end it is payment in full, a written release from the creditor, or the expiry of the applicable limitation period, and each depends on the wording of the guaranty and the law of the state it selects.
Which funding products does this apply to?
Merchant Cash Advance, Working Capital, Term Loan, SBA Loan, Equipment Financing. Each has its own page listing the funders in this directory that offer it and what each one publishes about its terms.
Are the figures here quotes?
No. Every worked example is labelled illustrative and exists to show the arithmetic. What a particular lender charges is on that lender's page, where it publishes it at all.
Who writes this?
The Find Me Funders research desk. Some drafting is AI-assisted, and every page that is says so at the top, including whether a person has checked its claims yet.
How do I know a figure here is right?
Where a page carries the green notice, its claims were checked against the sources listed at the end and a reviewer is named. Where it carries the amber one, nobody has verified it yet and you should confirm anything you plan to act on.
Are the examples real deals?
No. Every worked example is labelled illustrative and exists to show the arithmetic. What any particular lender charges is on that lender's page, where it publishes it.
Why do you never say what a typical rate is?
Because we cannot source it. A market average assembled from lenders who do not publish prices is a guess with a decimal point on it. Where a lender publishes a figure, we show that figure and say where it came from.
Is this financial or legal advice?
No. It is general information about how these products work. Outcomes depend on your contract and your state, and a lawyer or accountant licensed where you are is the person to ask about your situation.
Can I reuse this content?
Quote a paragraph with a link back. Do not republish whole articles.