What to do next
Identify what's being secured
Understand exactly which assets the lender can seize on default. In the US this is typically a UCC security interest; in Canada, a PPSA security agreement (a hypothec in Quebec). Broad 'all present and future assets' language is common — know if you're granting it.
Read the covenants and default triggers
Financial covenants (ratios you must maintain) and 'material adverse change' clauses can put you in default without you missing a single payment. Check whether the tests are realistic for your business plan.
Treat a personal guarantee as a personal decision
A guarantee bypasses the liability protection of incorporating and can reach your home and savings. Ask whether it can be limited in amount or time, and get independent advice before signing.
Frequently asked questions
Does incorporating protect me if I sign a guarantee?
No — that's the point of a guarantee. It puts your personal assets behind the company's debt, working around the separation incorporation provides.
Can a personal guarantee be negotiated?
Often, yes. Caps on amount, time limits, release conditions, and removing spousal guarantees are all commonly negotiated, especially where the business has other security to offer.
What is a covenant breach?
Failing a condition in the loan agreement — often a financial ratio — which can trigger default and let the lender demand repayment even if payments are current.
Should a lawyer review a standard bank form?
Yes. 'Standard' forms are drafted for the lender, and the security and guarantee terms carry the largest personal downside in the whole transaction.
This is general information, not legal advice. Laws vary by location and every situation is different — speak with a qualified lawyer about your specific circumstances.