Signing a Personal Guarantee: Think Before You Sign

A personal guarantee is a promise to pay a business debt yourself if the business doesn't. Banks, landlords and suppliers often ask for one, especially from new corporations.

Why it matters

• Incorporating usually protects owners from company debts. A personal guarantee removes that protection for the guaranteed debt.
• If the business defaults, the lender or landlord can sue you directly.

In writing

In Ontario, a guarantee generally must be in writing and signed to be enforceable.

What to look for

• Limited or unlimited: is there a maximum amount?
• Continuing: does it cover future debts and renewals?
• Joint and several: can each guarantor be pursued for the full amount?
• Waivers: have you waived defences, such as the right to notice?
• Ending it: can you end the guarantee, for example when you sell your shares?

Ways to reduce your risk

• Ask for a cap, a time limit or a release after a period of good payment.
• For a lease, try to limit the guarantee to a number of months of rent.
• Avoid having a spouse or family member guarantee without independent legal advice.

If you are called on to pay

Don't ignore the demand. Check the guarantee's terms and any defences before you respond.

Sources

• Statute of Frauds (Ontario)
• Canadian Bankers Association

Read next: Hiring Your First Employee in Ontario: A Checklist

General Ontario legal information, not legal advice for your matter, and reading it does not create a retainer. Sources checked 15 October 2026: check the current law, forms and dates before you act.

Photos from Pexels: Signing a document with a fountain pen · Papers marked paid and due beside a calculator.

This article is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.