Common among most financing arrangements for small and medium sized businesses is some form of personal guarantee on the part of the owner. If your customer is the U.S. Government, the form of that guarantee is important. For government contractors, guarantees that may sound benign can have unintended consequences.
The two most common types of guarantees are (1) personal guarantees, and (2) validity guarantees.
Most business owners are familiar with a personal guarantee. It is simply a promise to repay a loan if the company cannot repay it. For a commercial bank, requiring a personal guarantee is not …read more
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