Most credit applications contain a personal guaranty. In this one, it's clearly spelled out in item No. 4, but in some cases it's buried in a longer document and written in language that makes it hard for the applicant to understand just what he's agreeing to.

When the owner of a new or small business applies for credit, he or she is frequently asked to provide a personal guaranty. The guaranty is a contract between the owner and the creditor that in essence says, "I agree to be personally responsible for the debts of my business, so if the business doesn't pay, I will."

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