Hey Reader,
You’re reading The Long Game - insights on financial mastery, entrepreneurship & building a rich life from Andrew at eComFuel.
When a Personally Guaranteed Loan Goes Bad
One of the most terrifying moments for my friend, Bill D'Alessandro, happened in a deal we did together.
He was sitting in his car in a parking lot, hands shaking, staring at a letter.
Our main supplier—who provided 80% of our SKUs—was terminating us.
Bill was holding a 7-figure personal guarantee on debt for the business.
If our business went under, the bank wasn't coming for the LLC.
They were coming for Bill.
His brokerage accounts. His savings. His family's home.
Turned out to be a clerical error. "Sorry, disregard."
But those 20 minutes aged him. And burned into both our minds the weight of the PG.
A personal guarantee means your life is the collateral.
If the business can't pay, creditors bypass the corporate veil entirely. They start coming after your personal assets.
Now, a lot of entrepreneurs have successfully used a PG to finance life-changing businesses. It has a time and place.
But you need to approach it with eyes wide open.
Before you sign a PG, run this test: would I wire this exact amount from my personal savings into this business today, knowing I might never see it again?
Because that's what you just agreed to.
Most business credit cards are personally guaranteed. All the cards you're running ads through and collecting points on.
Businesses fail, thinking they're walking away, then Amex starts calling their personal cell.
Know your total PG exposure.
Audit every piece of debt you're holding. Paste the agreements into AI and ask: "Am I personally guaranteeing this?"
Hopefully you don't see any surprises.
Look at that number. Ask yourself if you could survive writing that check, or are willing to risk bankruptcy.
If the answer is no, start reducing exposure before you need to.
This is an excerpt from my series on Financial Mastery, specifically Commandment #4: Borrow Wisely.
Failing to treat the PG with deep respect is just one common borrowing mistakes I see.
For a deep dive on 7 other common mistakes eCom owners make around debt, check out the full article + podcast linked below.
And if you're not already, give Bill a follow over on X (@billda) - he's a great follow.
Go deeper on common debt mistakes:
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