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Why do creditors request personal guaranty for many commercial accounts?
In the realm of business open accounts, creditors will often evaluate the credit worthiness of a corporate applicant. Unless the applicant has an established credit history and sound financial underpinnings, lenders generally will seek to guarantee payment of the account often from the principals of the applicant. If there are still questions about the creditworthiness, the creditor may require further guarantors whether they be a related corporate entity(ies) or an individual(s). A spouse cannot be required to serve as a guarantor unless the spouse is actively involved in the business. A spouse may be asked to be a guarantor if the creditworthiness of the applicant and principal are not sufficient to warrant extending credit.
This information applies to All Counties in North Carolina.