Can I negotiate a cap on what my personal guarantee actually covers?

Yes. A personal guarantee does not have to be unlimited, and a "limited guarantee," capping the guarantor's exposure to a specific dollar amount or a defined percentage of the total loan, is a recognized and commonly used alternative to an open-ended guarantee that would otherwise expose the guarantor's personal assets for the full outstanding balance, plus interest and collection costs.

Whether a lender agrees to this depends on its own credit policies and how comfortable it is with the overall strength of the deal, and lenders financing a newly acquired small business with limited operating history may resist capping a guarantee precisely because the guarantee is meant to be their main additional comfort beyond the business's own uncertain track record. Even so, this remains a legitimate point to raise during the loan negotiation, before signing, rather than something to accept as non-negotiable by default. A buyer concerned about the scope of a personal guarantee should raise a proposed cap early and be prepared to explain why the underlying deal supports it.