Personal guarantee in factoring contracts

A personal guarantee can make an owner personally responsible for certain obligations under a factoring agreement.

Key takeaways
  • A personal guarantee can extend liability beyond the business entity to the individual owner.
  • The scope may be limited or broad; read it alongside the repurchase and default clauses.
  • Confession-of-judgment language in some guarantees can allow collection without prior notice.
  • Do not assume a business receivables transaction has no personal exposure.

A personal guarantee can make an owner responsible for specified obligations. The scope may be narrow or broad.

Guarantees may cover repurchase obligations, fraud, fees, collection costs, or all amounts owed under the agreement.

Personal exposure

Do not assume a business receivables transaction has no personal exposure. Read the guarantee and any confession-of-judgment or attorney-fee language where applicable.

Related reading

Sources

  • International Factoring Association - International Factoring Association. Accessed 2026-05-19. Industry association source for factoring terminology and industry context.
  • Secured Finance Network - Secured Finance Network. Accessed 2026-05-19. Industry education source for secured finance and asset-based lending context.
  • Uniform Commercial Code Article 9 - Uniform Law Commission. Accessed 2026-05-19. Reference for secured transactions concepts including receivables and filings.
Financial disclaimer. This page is educational only and is not financial, legal, tax, accounting, or credit advice. Factoring terms vary by provider and contract. Read the full disclaimer.