UNDERSTANDING PERSONAL GUARANTEE AND CORPORATE GUARANTEE IN GST

Personal guarantee is a legal agreement where an individual agrees to take responsibility for the liabilities of a business in case of default.

Corporate guarantee is a legal agreement where a company agrees to take responsibility for the liabilities of another company in case of default.

Personal guarantee is usually required by lenders when a business does not have a strong financial standing or credit history.

Corporate guarantee is usually required by lenders when a company wants to borrow money on behalf of another company.

Personal guarantee is a risky proposition for individuals as they become personally liable for the debts of the business.

Corporate guarantee is a safer option for companies as they are not personally liable for the debts of the other company.

Businesses should carefully consider the implications of personal and corporate guarantees before entering into any legal agreements.