What is the difference between a guarantee and a security interest when a lender wants protection?

A guarantee is a promise made by a third party — often a director or shareholder of a borrowing corporation — to pay the corporation's debt personally if the corporation itself doesn't. It doesn't attach to any specific asset; it simply gives the lender another person to pursue for repayment, backed by that guarantor's personal assets generally, rather than by any particular collateral.

A security interest, registered under the Personal Property Security Act, instead gives the lender rights over specific collateral belonging to the corporation (or sometimes the guarantor), letting the lender seize and sell that collateral if there's a default, rather than simply suing someone for money. The two serve different purposes and are commonly used together: the security interest gives the lender a direct claim on business assets, while the personal guarantee extends the lender's reach beyond the corporation to an individual, which matters especially for a small or newer corporation whose own assets may not fully cover the loan. For a director asked to give a personal guarantee, understanding that it exposes personal assets separately from any corporate security is an important distinction, not a formality.