Discussion 1

If a business is set as a sole proprietorship, personal loan guarantee means that the owner is liable to pay the loan if the business is unable to repay. The creditor can go after the assets of the owner since he or she is not separate from the business itself. The creditor can go after the owner’s personal bank account, their wages and even foreclose on their house (Steingold, 141).

This case also applies for general partnership, where the personal loan guarantee will impact on all the partners and not only the guarantor.  Every partner in the business bears 100 percent of the loan taken by a single partner. If there are not sufficient funds or even business assets to pay for this loan or debt and the other partners are cannot pay, the personal assets of the partner how guaranteed will be taken to pay for the loan.  It does not only consider only the pro rata share of this loan or debt(Steingold, 141).

For a limited partnership, the personal loan guarantee means that legal liability of a partner may flow from their actual control over the operations of the enterprise. A general partnership is exposed unlimited personal liability if the business is unable to pay the loan. The personal assets of the partner can be sold by the creditor to recover the loan. If the business has more than one general partner, the general partners are severally and jointly responsible to pay the loan if the business is unable to pay (Steingold, 142).

If the business is a limited liability Company, normally the person and this business are separate entities. Signing the personal guarantee means that one has given up the limited liability deliberately and is therefore liable (Steingold, 142).

Reference

Steingold, Fred S. Legal Guide for Starting & Running a Small Business. Nolo, 2017. Print. 141-142