MCA risks and operations · Business Funding Question
A source-backed answer for business owners comparing funding structures, costs, repayment, qualification, and risk.
Short answer
A personal guaranty is an owner’s contractual promise relating to the business’s obligations. MCA guaranties vary: some describe liability for specific breaches or bad acts, while others may be broader. Owners should read the guaranty separately from the main agreement and obtain legal advice about triggers, defenses, remedies, and governing law.
Do not rely on a no-collateral slogan
Marketing may distinguish collateral from a personal guaranty, but the contract can contain both guaranty and security provisions. FTC cases have alleged misleading claims about these obligations. Check the signed documents rather than assuming the advertisement controls.
Identify every trigger
Review statements about diverting receipts, blocking debits, changing accounts or processors, providing inaccurate information, dissolving the business, selling assets, bankruptcy, and ordinary business failure. Small wording differences can change exposure materially.
Understand remedies and venue
The guaranty may address collection costs, attorneys’ fees, arbitration, litigation venue, confession of judgment where permitted, waiver provisions, or rights against personal assets. An intermediary should not interpret these terms as legal counsel.
Negotiate or decline before signing
If a term is unacceptable, seek a written change before execution or compare a different product. Verbal assurances that a clause will never be used do not remove it. Keep the final signed agreement and every disclosure in an accessible file.
Practical example
A representative says the owner is not personally liable if the business slows, but the guaranty includes broad default language for account changes and payment interference. The owner asks counsel to explain the triggers and requires any negotiated limitation to appear in the final document.
Business-owner checklist
- Locate every guaranty provision
- List conduct that triggers liability
- Review remedies, fees, and venue
- Compare marketing statements with the contract
- Obtain independent legal advice
Related DNVR Group guidance
- MCA Pros and Cons
- Factor Rates, Total Payback, and Daily Payments
- DNVR Group Funding Disclosure
- Which Industries May Have Trouble Qualifying for an MCA?
- When Does a Merchant Cash Advance Make Sense for a Business?
Sources and further reading
Important funding disclosure
DNVR Group is a business funding intermediary. DNVR Group does not fund loans directly, make credit decisions, or guarantee approval, rates, amounts, or timelines. Offers and final terms are determined by independent third-party providers. This resource is educational and is not legal, tax, or accounting advice. Review all documents and consult qualified advisers for your circumstances.
Updated August 2026. Prepared by DNVR Group using the cited public sources. Featured photo: Sasun Bughdaryan on Unsplash.