A personal guarantee is an agreement regarding debts owed. It is used by borrowers to show lenders they intend to pay their company's debts personally. A lender may require a personal guarantee before issuing any needed funds so they can ensure they'll receive payment, either from the owner of a company, or a member of management.
Historically letters of intent have been used for travel or Visa requirements, to assure a government agency that the traveler is financially secure. But this document is most commonly used to secure a loan, either by a bank or other lender who can provide financing.
By issuing a letter of guarantee, the guarantor is promising to take responsibility if the borrower forfeits a contract, a loan, or any other deal. In the event a loan can't be repaid, the agreement often grants the lender a chance to seize the assets of the individual who signs the guarantee. A personal guarantee is legally binding and susceptible to court action if not fulfilled.