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Business
PERSONAL GUARANTEES
Should Startups Take It Personally?
Irwin Kramer: When you sign on the dotted line you may want to give more than a simple autograph.
Richard Booth: When you are entering into agreements on behalf of your company sign in your capacity as an Officer. So if you were the President of the company, sign John Doe President of ABC Company. And be very careful not to simply sign your name without identifying the capacity in which you are executing an agreement. You may will find yourself personally liable, simply by virtue of the fact that you haven't been clear enough about whether you were doing this act on behalf of the company or on behalf of yourself personally.
Irwin Kramer: But if you are running a startup company those you are contracting with may not let you off that easy.
Richard Booth: Many businesses that you deal with will require you to provide a personal guarantee in case the business defaults.
Irwin Kramer: That is normal and that is to be expected.
Richard Booth: If your business fails, and you have signed as a Guarantor on a lease for office space or car loan, you will have to pay it personally.
Edward Jacobson: Now when a bank ask you for personal guarantee, you on your side -- to negotiate on your side, if you are married then you will offer only your own personal guarantee. You try to keep your spouse out of the personal guarantee.
Richard Booth: These things are always negotiable.
Edward Jacobson: If it's just your guarantee then only those things in your name would be subject to your bank's collection procedures.
Richard Booth: And it's up to the third-party, it's up to the potential creditor to ask you for the guarantee. If they don't ask, they don't get one.
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