What is a Personal Guaranty?

A personal guaranty is part of our agreement stating that in the event that the business is unable to pay for merchant services fees, that you as an individual will compensate us instead. It’s quite rare that a personal guaranty is enacted, but it is put into place to protect Dharma and our processing bank from unpaid merchant service fees. Personal guaranties are a common practice in the industry of merchant services.

If a personal guaranty is a sticking point for moving forward, we can typically proceed with a few additional pieces of documentation. When bypassing a personal guaranty, our underwriters will want to be convinced of one thing: can this business withstand potential future losses? Basically, they’ll want to review some sort of financial documentation to quell any concerns that the business would be at risk, and thus, unable to pay merchant services fees. Usually, the requirements are 3 recent months of bank statements, the most recent year’s tax return, and business financials such as a balance sheet or P&L sheet.

Please note that nonprofits are NOT required to sign a personal guaranty.