The Weight of a Personal Guarantee

The weight of a personal guarantee, what does it hold anymore?

My Associates and I sat pondering this today, after a potential client called in. His dilemma was simple; he needed about $300k of Accounts Receivable Financing for his business, and conveniently, he called Lenders Commercial Finance.

We have been discussing doing asset-based lending with companies like this recently. These are the new trend of web-based businesses, that are doing either advertising, marketing, SEO, or what seems to be a limitless list of options. Our dilemma is this: We have a company that has a Pro Forma that is almost unbelievable, or is it? If you can simply find build a market share for someone on the internet, or gets traffic directed to adds, and continue to expand the horizons of that business, it is believable.

The problem with some financiers today, is that they are on the uphill side of the technology curve. Their experience was on pen and paper, or a typewriter, and they cannot wrap their arms around a concept of a webpage making a huge amount of money. Fortunately, we at Lenders Commercial Finance, are not on that learning side of the curve. We have a very informative and educated staff, where we share ideas, create ideas, and sift through other's ideas, to make profitable business decisions.

Our big point at hand in this article, is the fact that we are discussing ideas of financing online businesses, and with this idea, we need things like a personal guarantee to back up our decision to finance them. So if you are looking for a chunk of financing, with a somewhat "exponentially profitable" business, why can you not offer us a personal guarantee?

It reminds me of the days when a handshake sealed a deal over cocktails and a meal. Now paperwork, credit checks, and a cadre of other pre-requisites are needed to have anything be finalized. If you are blazing trails for an entrepreneurial business, there shouldn't be a reason that you, the person on this venture, wouldn't back it whole-heartedly.

What does a personal guarantee stand for anymore? Does it say, yes, I am a businessman, and my life and soul is this business, or does it say: sure I'll agree to whatever you would like, as long as you just hand me that check?

As Bob Dylan said, Times They are a Changin'