Do hard money loans require a personal guarantee?

Almost always, and every loan here does. The LLC is the borrower, and the person behind it signs a guaranty promising to repay if the LLC does not.

If my LLC borrows, am I personally liable?

For that loan, yes, once you sign the guaranty. The LLC still protects you from other claims, such as a tenant's lawsuit, but the guaranty is a separate promise that you will cover this debt.

Why do lenders require a personal guaranty from an LLC?

Most investment LLCs own one property and hold little else. Without a guaranty, a borrower could walk away from a loan with no consequence beyond that one asset. The guaranty keeps the person who makes the decisions invested in the outcome.

What should I read in a personal guaranty before signing?

Whether it covers the full balance or a limited amount, whether it includes interest, fees and legal costs, whether it is joint and several with other members, and whether it ends when the loan is repaid.

BlogGuide

Personal guaranty on a hard money loan: what you are signing

The LLC borrows, but you guarantee it. What a personal guaranty covers, why nearly every hard money lender requires one, and what to read before you sign.

September 27, 2026 · 3 min read

When you borrow for a flip, the loan is made to your LLC. That surprises nobody. What surprises some first-time borrowers is the second document at closing: a personal guaranty, signed by you, promising to repay the loan if the LLC does not.

Nearly every hard money and private lender requires one. I do, on every loan. Here is what it is, why it exists, and what to read before you sign it.

What the guaranty does

The LLC is the borrower. The property is the collateral. The guaranty adds a third layer: you, personally, as the backstop.

If the loan goes into default and the sale of the property does not cover what is owed, the lender can look to the guarantor for the shortfall. That is the whole point of the document.

Why the LLC does not protect you here

An LLC shields you from the company's debts and liabilities in general. A guaranty is you choosing to step outside that shield for one specific debt. The LLC still does its job everywhere else: a contractor dispute or a tenant claim against the company stays with the company. This one loan does not.

Why lenders require it

Most investment LLCs own one property and not much else. Without a guaranty, a borrower whose project goes badly could let the LLC default and walk away. The lender would be left with a half-finished house and no one accountable for it.

The guaranty is not an expectation that things will go wrong. It is what keeps the person making the decisions on the project invested in how it ends. It is also why a lender can fund on the strength of the deal rather than demanding tax returns and a personal financial statement up front.

What to read before you sign

Guaranties are not all written the same. Before closing, check:

Full or limited. Does it cover the entire balance, or a capped amount or percentage? Most hard money guaranties are full.
What is included. Principal only, or also interest, default interest, fees and the lender's legal costs? Usually all of them.
Joint and several. If your LLC has partners who also sign, each of you can be responsible for the whole amount, not just your share.
When it ends. It should fall away once the loan is repaid in full.
Carve-out language. Some commercial loans use a narrower "bad boy" guaranty that only applies to specific acts such as fraud or selling the property without paying off the loan. Know which one you are signing.

Have your own attorney read it. That is not a formality on a document with your name on it.

How to make the guaranty irrelevant

The guaranty only matters if the deal fails and the property does not cover the loan. The things that prevent that are the same things that get a loan approved: a realistic budget from a real contractor, an ARV built on true comparables, enough room in the numbers for a delay, and an exit you can prove. If the timeline slips, talk to your lender early. Most delays are solved with an extension, covered in what happens when a flip runs past the loan term, long before anyone reads the guaranty again.

For the rest of what a lender looks at, see hard money loan requirements.

Common questions

Do hard money loans require a personal guarantee?: Almost always, and every loan here does. The LLC is the borrower, and the person behind it signs a guaranty promising to repay if the LLC does not.
If my LLC borrows, am I personally liable?: For that loan, yes, once you sign the guaranty. The LLC still protects you from other claims, such as a tenant's lawsuit, but the guaranty is a separate promise that you will cover this debt.
Why do lenders require a personal guaranty from an LLC?: Most investment LLCs own one property and hold little else. Without a guaranty, a borrower could walk away from a loan with no consequence beyond that one asset. The guaranty keeps the person who makes the decisions invested in the outcome.
What should I read in a personal guaranty before signing?: Whether it covers the full balance or a limited amount, whether it includes interest, fees and legal costs, whether it is joint and several with other members, and whether it ends when the loan is repaid.

Have a deal like this

Run your numbers.

The calculators charge the costs this piece describes: points, interest over the hold, closing on both sides, carry, and the cost to sell. It takes about a minute.

Run your numbers Submit a deal