Comments on: Personal Guarantees are a fact of life for many entrepreneurs.

By: Tom

Tom — Wed, 04 Apr 2012 16:14:23 +0000

I’ve founded two startups that both got venture funding.

I had problems with both as a personal guarantor.

Nice article!

By: Frank Singer

Frank Singer — Sat, 10 Mar 2012 18:52:39 +0000

Dave,
I’ve got a good one on this. My partners and I signed a personal guarantee (IFR Avionics) twenty years ago for a $250,000 line of credit. The line included a business credit card with a $5,000 limit. I didn’t want the company to have credit cards so I cut mine up. Within a few months we changed banks and canceled the line which we actually never used.

I sold the company five years ago. The new owners of the company found one of the credit cards (I didn’t realize the bank sent two cards) and started to use it running it up over $35,000. When the bank (Wells Fargo) couldn’t collect they sold the debt to a collection agency. The collection agency tried unsuccessfully to collect from the company. They found the twenty year old personal guarantees so they also sued the three of us who signed the original twenty year old guarantee as well as dinging our credit.

So far we have spent $10,000 on legal fees and it gets worse. I happen to have a home equity line with, yes you guessed it, Wells Fargo. I haven’t used the line which has been in place for thirty years and rarely used. The line is for $250,000 backed by a home worth ten to twenty times as much with no mortgage. Yep, Wells Fargo cancelled the line because they said “my financial condition” changed.

By: Dave Berkus

Dave Berkus — Tue, 06 Mar 2012 20:51:54 +0000

Jeff,
Here is more than a link to Asterisk Financial, the oompany that invented the personal guarantee insurance product, the link is to my own story of a guarantee gone bad back in 1974 that illustrates the point all to personally. (Note that I have no personal interest in the firm, just an appreciation for the product, as my story reveals.)

-Dave
http://www.personalguarantee.com/asterisk/testimonial-view/16/real-life-stories

By: Jeff Strider

Jeff Strider — Tue, 06 Mar 2012 20:22:49 +0000

David:

This is an interesting post. Can you please provide the name of the insurance company providing this product and the name of the product per the insurer’s marketing literature.
Thanks in advance
Jeff Strider
Member – Delaware Crossing Investor Group, Mid-Atlantic Angel Group Fund II, Robin Hood Ventures