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Release a Personal Guarantee on Business Credit
By The BIDaWIZ Team - December 27, 2009
The good news is that it is possible to release a personal guarantee from your business credit. The bad news is that it is by no means a cakewalk.
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Analyzing the Situation
If you have personally guaranteed the debts of your business than you are personally liable if the business should default.
Since the bank will still go after you should a default occur, the credit agencies factor this personal guarantee in your credit score. This is done so that other creditors would have an idea of your true potential liabilities should you need to obtain additional credit. If you were a lender, you would want to know this information too.
So what can you do?
Start with contacting your business banker and explain
the situation that you are looking to release the personal
guarantee on your business.
It
is not entirely easy to get rid of a guarantee but you may be
successful if you present a strong case to your business banker. You
will have to convince him that your business is doing well now and is
expected to do so for years to come.
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Be prepared to highlight the company's revenue growth, profitability, cash flow position, how results exceed expected goals, excellent repayment history and improved collateral at this point in time. If the banker doesn't budge much, ask them upfront what they need to see to release the guarantee. It is likely, that they'll want you to make larger repayments on your existing loans. But, be sure to ask as every loan officer is slightly different in their approach.
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More Business Credit Questions?
Your specific situation may not fall under the circumstances detailed above. If so, the Financial Advisors are Here to Assist.
Have Comments? Write to comments@BIDaWIZ.com
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