Personal Guarantee (Entrepreneurial Finances) - Definition, Examples, Advice | Bolder Money

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Personal Guarantee Personal Guarantee

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Definition

Promising to pay back a loan if the business can’t. Lenders ask for this to feel safer about giving out money.

What to consider

Understand the mix of fixed and variable costs.
Monitor changes in sales volume carefully.
Plan for lower sales periods to mitigate risks.

Real world scenarios

A manufacturing company benefits from high fixed costs when sales increase, boosting profit margins.
An entrepreneur calculates how a small increase in sales can lead to a large jump in profits due to fixed expenses.
A retailer examines how scaling operations affects its overall profitability.

Related terms

Entrepreneurial Finances

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