What is a Personal Guarantee Agreement?
It is used by private lenders, borrowers and guarantors who want the terms recorded before work starts or money changes hands, rather than reconstructed from memory afterwards. Putting it in writing is what turns an understanding into something either side can rely on.
13 details are captured across 5 areas: parties and contact details, scope and deliverables, payment and financial terms, dates, timing and duration, and legal protections and risk. Together they fix what the lender owes the guarantor, measured in guaranteed obligations rather than in adjectives.
The underlying debt the guarantee sits behind is what settles most disagreements here, which is why it is worth attaching rather than leaving in an inbox. Private agreements between people who trust each other are the ones least likely to be written down and most likely to end a relationship when they go wrong. The written record is the point.
The preview updates live as you complete each field, so you can review the exact language before downloading it as PDF or Word. Treat the result as a well-organised first draft: sound in structure, but worth an attorney's review where the sums involved are significant or the situation is unusual.
What matters most in a personal guarantee agreement
Write the amount in figures and words
This simple step prevents the most common alteration dispute, and it is standard practice on negotiable instruments for that reason.
Set a definite repayment schedule
'When you can afford it' has no due date, which means there is nothing to enforce and the limitation period may never begin to run.
Check the usury cap before setting interest
Every state limits enforceable interest. Exceeding the cap can void the interest and occasionally more.
When you need a personal guarantee agreement
- When you already have the underlying debt the guarantee sits behind: If there is a brief, plan, specification or schedule, attach it. An agreement that refers to a record nobody has attached is only half a record.
- When the discharge of the underlying debt matters to someone else: Where a lender, insurer, landlord or regulator will want to see the arrangement, it needs to be written to be read by them, not only by the lender and the guarantor.
- When more than one person is involved: Where several people share the obligation, the personal guarantee agreement should say whether they are liable together, separately, or both. That single word decides who can be pursued for the whole amount.
- When someone else is paying: Where a third party funds or guarantees the arrangement, they should be named and their obligations spelled out. A guarantee that is only implied is not a guarantee.
- When money changes hands: Record what the guarantor owes, when each guaranteed obligation falls due, and what follows a late payment. These are the clauses relied on most often and left vague most often.
- When the guarantee needs defining: Write down what is included and what is not. A specific description is what turns an extra request into a chargeable variation rather than an argument.
What to include in a personal guarantee agreement
This generator collects 13 details. Here is what each group covers and why it matters when the document is relied on.
Parties and contact details
These entries decide who can enforce and who can be enforced against. Where either side is a company, use the registered name — a trading name is not a party.
- Party A Name
- The full legal name of the first party. Where a party is a company, name the entity rather than an individual employee.
- Party A Address
- The first party's address for service of notices under the agreement.
- Party B Name
- The full legal name of the second party bound by the agreement.
- Party B Address
- The second party's address for notices and correspondence.
Scope and deliverables
Set out what the lender is delivering and, just as importantly, what is excluded. Most of the cost overruns in this kind of work start as an unstated assumption here.
- Purpose of Agreement
- Why the parties are entering into the agreement. This helps a court interpret ambiguous clauses in line with the parties' actual intent.
- Responsibilities
- What each party must do, provide or approve, allocated by name so no obligation is left unowned.
Payment and financial terms
Say what happens when the guarantor pays late. Without interest and a right for the lender to suspend, the deadline is a suggestion.
- Amount or Property
- A precise description of the money or property being transferred, with quantities and identifying details.
- Payment Terms
- The invoicing cycle, payment window, accepted methods and consequences of non-payment.
Dates, timing and duration
Where the lender depends on the guarantor for something, say what happens to these dates when it arrives late. Otherwise the delay attaches to the wrong party.
- Effective Date
- The date the agreement takes effect. This can differ from the signature date, and it is the date obligations start running from.
- Schedule
- The agreed timetable of dates, sessions or milestones.
- Notice Period
- How much warning a party must give before ending the agreement, and how notice must be delivered to count.
Legal protections and risk
Naming the governing law and the forum here avoids a preliminary fight about where a dispute over the guarantee is even heard.
- Default Terms
- What counts as a default, any cure period, and the remedies available to the non-defaulting party.
- Governing State
- The state whose law governs the agreement. Choose a state connected to the parties or the work, as a wholly unconnected choice may not be respected.
Completing this personal guarantee agreement
Signing and keeping it
Every party named should sign and date, and each should keep their own copy. Electronic signatures are valid for the great majority of agreements — retain the audit trail showing who signed and when.
Filling in every blank
Unfilled placeholders are read against whoever produced the document. If a field genuinely does not apply, write "not applicable" rather than leaving a gap.
Defining the discharge of the underlying debt
Say what has to be true for the discharge of the underlying debt to have happened and who confirms it. An undefined completion test is the reason obligations sit open long after the work is finished.
Dates that drive obligations
Use calendar dates rather than relative triggers such as "on approval", which cannot be measured. Dates determine when obligations start, when they end, and when someone is late.
Making the counts checkable
Where the price depends on guaranteed obligations, keep a contemporaneous record as they are delivered. A count reconstructed at invoice time invites a challenge that a running record would have prevented.
Common mistakes to avoid
- Silence on who carries the risk. Decide before the discharge of the underlying debt, not after, which side bears loss or damage and who insures it. Once something has gone wrong, both parties read the silence in their own favour.
- Assuming insurance responds. Check that the policy actually covers this arrangement and this value. Cover assumed and never verified is the most expensive kind of assumption in the file.
- Signing before the underlying debt the guarantee sits behind is settled. The agreement leans on the underlying debt the guarantee sits behind, so that needs to be confirmed and attached at signature rather than promised for later. A contract pointing at something nobody has produced yet is an agreement to agree.
- No mechanism for changes. Things change after signature. A short variation clause — changes in writing, signed by both, priced before they start — costs nothing to include and settles the argument before it begins.
- No record of what was handed over. List what passes between the parties and when. Reconstructing that list months later, from memory, is how honest people end up in genuine disagreement.
How to use this personal guarantee agreement generator
- Fill in the form. Complete the 13 fields above. The lender and the guarantor both need naming in full, and the guarantee should be described in enough detail that a stranger could tell whether it had been delivered. Nothing is sent to a server — the document is assembled in your browser.
- Read the preview. Read the preview as though you were the guarantor rather than the lender. Anything ambiguous is easier to fix now than to argue about after the discharge of the underlying debt.
- Download and sign. Export as PDF to sign, or as Word to keep working on it. Store the signed version somewhere both the lender and the guarantor can find it, along with the underlying debt the guarantee sits behind.
Personal Guarantee Agreement — frequently asked questions
Is a loan between family members legally enforceable?
Yes, provided the essentials are documented: identified parties, a stated sum, a repayment obligation and signatures. Being related makes no difference to enforceability — but without documentation, a court or tax authority may treat the money as a gift, which can matter for both recovery and tax. Keep records of the transfer and every repayment.
What records should I keep alongside the personal guarantee agreement?
The underlying debt the guarantee sits behind, the signed document itself, and a contemporaneous note of anything agreed afterwards. Most disputes turn on what was agreed at the time, and the party who can produce a dated record is the party who wins that argument.
Who should sign the personal guarantee agreement?
The lender and the guarantor, through someone with authority to bind them. Where either is a company, that means a director or an officer with delegated authority — a signature from someone without it is a defence waiting to be raised.
Which state's law should govern this personal guarantee agreement?
Choose a state with a genuine connection to the parties or the subject matter — where a party is based, or where the work or property is located. A choice with no connection at all may not be respected, and for property or employment the local state's rules will often apply regardless of what the contract says.
How is notice properly given under this agreement?
Follow the notice clause exactly: use the stated method, send it to the address named in the agreement, and keep proof of delivery. Notice given informally — a text message, or an email to the wrong person — is frequently challenged, and a defective notice can leave the agreement running on.
What interest rate can I legally charge?
State usury laws set the ceiling, and it varies widely. Some states also treat loans differently depending on whether the lender lends regularly. Check your state's limit before setting a rate, since exceeding it can cost you the interest and occasionally more.
Does this document need to be notarised?
For most private agreements, no — signatures from both parties are enough. Notarisation is worth it for larger sums, anything secured against property, or where you anticipate the document being challenged, because it makes the signature very difficult to deny.
Do both parties need to sign the personal guarantee agreement?
Yes — every party named should sign and date it, and each should keep a copy. Electronic signatures are legally valid for the great majority of agreements under the ESIGN Act and equivalent laws, so signing digitally is fine provided you retain the audit trail.