💡 Summary #
A Personal Guaranty is a standard part of most business financing agreements – including factoring.
It helps Factor & Fund confirm that the business owner is engaged and acting in good faith, ensuring accountability without risking personal assets beyond agreed terms.
⚙️ What Is a Personal Guaranty? #
A Personal Guaranty is a short legal document signed by the company’s owner or authorized officer.
By signing it, you agree to:
- Honor the obligations of your company under the factoring agreement.
- Ensure all invoices submitted are valid and undisputed.
- Cooperate if funds are misdirected or buyers fail to pay due to fraud or misrepresentation.
🟦 We will always look for payment from the debtor first, your company second, and you as guarantor last – but because you received cash upfront, if the invoice is not paid, you must pay the invoice.
🔐 Why Factor & Fund Requires It #
- Trust & Integrity: Confirms that the business owner stands behind the invoices being factored.
- Fraud Prevention: Protects against intentionally falsified invoices or duplicate funding.
- Transparency: Keeps both sides aligned under California and federal lending laws.
- Industry Standard: Nearly all factoring, leasing, and financial institutions require it.
✅ It’s a protection tool — not a credit trap or loan guarantee.
⚖️ What the Guaranty Covers #
- Misrepresentation or falsification of invoices.
- Diversion of payments meant for Factor & Fund.
- Failure to remit funds if a buyer pays you directly instead of through the NOA.
- Cooperation during dispute resolution or audit.
- Any failure by the buyer (debtor) to pay the invoice for any reason, including insolvency, late payment, or legitimate dispute.
- If the company cannot return the funds, the guarantor becomes personally responsible for repaying the full amount.
🧩 How It Works in Practice #
- You sign the Continuing Guaranty once during onboarding.
- It stays valid for all factored invoices while your account is active.
- If you end your agreement, it automatically terminates once all invoices are closed and reserves are released.
Factor & Fund will provide written confirmation of release when your account is in good standing.
✅ Key Takeaways #
- Signing the guaranty is normal and low-risk.
- It proves your company’s legitimacy and supports rapid funding.
- It only activates if there’s fraud or intentional misdirection, or non payment.
- It never affects your personal credit score.
❓ FAQ #
Is this like a personal loan guarantee?
No. You’re not guaranteeing repayment like a loan – you’re confirming invoice accuracy and compliance and stand behind your work.
Can multiple owners sign the guaranty?
Yes, if multiple partners share ownership or operational control.
When is the guaranty released?
After your account closes and all outstanding invoices have been paid and reconciled.
