A new start-up corporation has gone to a bank for a commercial loan.Recognizing the start-up status of the business and the limited assets the corporation currently possesses,the bank may require that either collateral be pledged or a personal guarantee be signed by shareholders to protect its interests,but it may not require both.

Question

Quizplus · Accepted Answer

It is possible for a bank to require both collateral and personal guarantees from shareholders, especially if the start-up corporation has limited assets and a high risk of defaulting on the loan. This provides extra security for the bank in case the business is unable to repay the loan.

A New Start-Up Corporation Has Gone to a Bank for a Commercial