The Personal Guaranty Trap: How Florida Business Owners Sign Away the Protection They Just Built

You set up an LLC for one reason above all others: to keep the business’s debts off your personal balance sheet. Then a landlord, a lender, or a supplier slid a signature page across the table, and you signed a personal guaranty. In that moment, the debt you worked to wall off climbed right back over the wall. The LLC still stands. The protection you thought it gave you, on that one obligation, is gone.

Personal guaranties are everywhere in Florida business. You probably signed one the same week you formed the LLC. Understanding what you are signing, before you sign, is the difference between a calculated risk and a blind one.

What a personal guaranty actually is

A personal guaranty is a simple promise with heavy consequences. You agree that if your company cannot pay a specific obligation, you will pay it yourself, out of your own money. Your home, your savings, and your personal accounts can all be reached for that debt.

You will see guaranties attached to commercial leases, equipment financing, vendor and trade credit lines, and most small business and SBA-style loans. Counter-parties ask for them because they want a real person standing behind a young or thinly capitalized company. From their side, that is reasonable. From yours, it is often the single most important term in the deal, and the one that gets the least attention.

Why a Florida personal guaranty survives your LLC

Here is the part that catches owners off guard: your LLC works exactly as designed, and the guaranty still binds you.

Florida law is clear that a company’s debts belong to the company, not to its owners. Under the Florida Revised Limited Liability Company Act, “[a] debt, obligation, or other liability of a limited liability company is solely the debt, obligation, or other liability of the company,” and a member or manager “is not personally liable . . . for a debt, obligation, or other liability of the company solely by reason of being or acting as a member or manager.” See Fla. Stat. § 605.0304(1) (2025). That is the shield you paid to build.

A Florida personal guaranty slips past that shield because it is not a claim against you by reason of ownership. It is a separate contract you signed in your own name. The statute protects you from liability that attaches automatically because you are a member; it does nothing about a promise you volunteered as an individual. Florida’s Statute of Frauds even assumes the arrangement exists, requiring that a “special promise to answer for the debt, default or miscarriage of another person” be in writing and signed to be enforced. See Fla. Stat. § 725.01 (2025). Sign that writing, and you have stepped outside the LLC on that one debt.

So the LLC and the guaranty are not in conflict. They run on separate tracks. The company owes the debt; you separately promised to cover it if the company does not.

The terms that decide how far it reaches

Not all guaranties are equal. A handful of provisions control how much of your personal life is actually exposed.

Cap versus unlimited: An unlimited guaranty puts you on the hook for the entire obligation, plus interest, late fees, and often the other side’s attorneys' fees. A capped guaranty limits you to a fixed dollar amount. That single choice can separate a manageable risk from a ruinous one.

Survival on sale or departure: Many guaranties keep binding you after you sell the company or walk away from it. You can stay personally liable for a lease or credit line years after you last touched the business, unless the document says otherwise.

Joint and several exposure: When several owners guarantee the same debt jointly and severally, the creditor can collect the whole balance from any one of them. If your partners cannot pay, you can be left holding all of it, not just your share.

Burn-off and limited guaranties: Some guaranties shrink or fall away once the company hits agreed milestones, such as a stretch of on-time payments or a financial threshold. They are worth asking for, and counter-parties grant them more often than owners expect.

How to negotiate before you sign

A guaranty is a negotiation, not a formality. Reasonable counter-parties expect the ask, and many say yes when a business owner simply raises it. Ask for a cap, so your exposure has a ceiling. Ask for a release on sale, so the guaranty ends when you exit. Ask for a sunset or burn-off, so the personal exposure expires once the company proves itself. Even partial wins here materially shrink your risk, and a landlord or lender would often rather adjust the guaranty than lose the deal.

What to check before you sign

Before you sign anything with a guaranty in it, read for four things: (1) is it capped or unlimited; (2) does it survive your departure; (3) is it joint and several; and (4) does anything ever make it end? If you cannot answer those from the document, you are signing blind. This is the same discipline that avoids the common contract mistakes that surface long after signing.

Having the guaranty reviewed costs a small fraction of what it can expose. When the number you are personally guaranteeing carries five or six figures behind it, an hour of counsel beforehand is inexpensive protection. The time to shape a guaranty is before the ink dries, not after the company misses a payment.

If you are staring at a guaranty right now, Korkin Law reviews them for Florida business owners and offers a free initial consultation. Get in touch before you sign.

Frequently asked questions

Does an LLC protect me if I signed a personal guaranty?

• Not for that debt. Your LLC still shields you from the company’s other obligations, but a personal guaranty is a separate contract in your own name, so the creditor can pursue you personally for the guaranteed amount.

Are personal guaranties enforceable in Florida?

• Yes. A written, signed personal guaranty is generally enforceable as an ordinary contract, and Florida’s Statute of Frauds requires such a promise to be in writing and signed. See Fla. Stat. § 725.01 (2025).

Can I negotiate a personal guaranty?

• Often, yes. Owners frequently obtain a dollar cap, a release on sale of the business, or a burn-off after a period of good payment history. Counter-parties agree to these more often than owners assume, especially when asked before signing.

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This article is for general informational purposes only and is not legal advice. Reading it does not create an attorney-client relationship. Every business is different; consult a qualified Florida attorney about your specific situation.

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