If I personally guarantee my corporation's bank loan, what am I actually agreeing to in Ontario?

When you sign a personal guarantee on a corporation's loan, you are agreeing to be personally responsible for the corporation's debt if the corporation does not pay. The guarantee effectively removes the shield of limited liability for that specific obligation. If the corporation defaults, the lender can pursue you personally for the full amount guaranteed — your personal savings, home equity, investments, and other assets may all be at risk.

Guarantees are extremely common in commercial lending in Ontario. Banks routinely require personal guarantees from director-shareholders of small private corporations before extending credit, because the corporation itself may have limited assets. The guarantee may be unlimited (covering the full loan amount, interest, and costs) or capped, and it may be continuing (covering future advances) or limited to a specific transaction.

Before signing, you should understand the exact scope of the guarantee — what is covered, whether it can be called without notice, and whether you have any right to demand that the bank pursue the corporation first before coming after you. The guarantee document typically waives many of these rights. Negotiating limitations — a cap on amount, a requirement to exhaust corporate assets first, or a release upon corporate sale — is possible, though lenders may not agree. A lawyer can review the guarantee terms and advise on what you are actually agreeing to before you sign.