Personal Guarantee on a Merchant Cash Advance in Ontario: What It Reaches, and Your Defences
A merchant cash advance funder rarely sues just the business. If you signed a personal guarantee at funding, your name is on the claim too, and a judgment against you personally is enforced against your own property, not only the company’s. Before you assume there is nothing to do about that, two questions matter more than the balance on the claim: what kind of guarantee did you actually sign, and did anything happen after signing that a court would say lets you out of it, in whole or in part.
What kind of guarantee did you actually sign?
Not all guarantees work the same way, and the wording decides more than most guarantors expect.
Most MCA guarantees are drafted as a guarantee of payment: the funder can pursue you personally the moment the business is in default, without first suing the company to judgment or exhausting its assets. A guarantee of collection — where the funder has to go after the business first — is rarer, but not unheard of, and it is worth checking which one you signed before assuming the funder’s sequence was correct.
Some agreements instead use a performance guarantee: rather than promising to pay the debt, you promise the business will not breach the funding agreement. In practice a breach usually means non-payment, so the exposure ends up similar, but the wording changes what the funder has to prove.
Look for whether the guarantee is continuing — covering renewals, increases and future advances between the same parties — or limited to the original agreement. Continuing, unconditional guarantees are the norm in this industry, and that wording does real work later. And if more than one owner signed, check whether liability is joint and several: the funder can generally collect the entire amount from any one guarantor, leaving that guarantor to sort out contribution from the others afterward.
Is there a valid, signed guarantee at all?
Ontario’s Statute of Frauds bars an action to enforce a promise to answer for another person’s debt unless it is in writing and signed by the person to be charged, or by someone lawfully authorized to sign for them. An electronic signature is not the problem — Ontario’s electronic commerce rules generally treat those as valid — the question is whether your signature appears, in your personal capacity, on the guarantee itself. A signature block that only shows a corporate title, with nothing indicating you also signed personally as guarantor, is worth having read carefully. So is a guarantee that names the wrong legal entity, or that a co-owner signed on your behalf without authority.
What a judgment on the guarantee can reach
The guarantee itself does not put a charge on anything. What it does is expose you to a personal judgment if the funder sues and wins, and a judgment is what opens the door. In Ontario that means a writ of seizure and sale that can bind a home you own — the Execution Act shields a principal residence only up to a prescribed equity cushion, currently $12,997, which will not protect meaningful equity — or a garnished bank account. Whether a creditor can actually force a sale is a longer question than most people assume, but the guarantee is what gets you there in the first place, which is why the defences below matter before judgment, not after. For the fuller picture of what a lawsuit over the advance itself looks like, see our guide to being sued over a merchant cash advance.
Was the deal changed after you signed?
A guarantor generally answers for the deal they agreed to back, not a different one. In Manulife Bank of Canada v. Conlin, the Supreme Court of Canada released a guarantor after the lender renewed the underlying loan on new terms without telling him — he had guaranteed one arrangement, and the lender and borrower had since agreed to a materially different one without his consent. Applied to an MCA, a renewal, a second advance rolled into the first, or a changed debit schedule agreed between the funder and the business, without you, can raise the same question.
The catch: most current MCA guarantees are drafted specifically to close this door, with language making the guarantee continuing, unconditional and irrevocable regardless of renewals, extensions or amendments to the funding agreement. Where that language is clear, Conlin does not help. Whether this defence has any traction turns entirely on what your specific document says, not on a general rule guarantors can rely on.
Was security released without your consent?
Most funders also register a security interest against the business’s assets. If the funder released or materially impaired that security — discharging it, or allowing it to be primed by another creditor — without your consent, in a way that reduces what you could recover from the business if you end up paying, that can reduce or discharge your obligation to the extent of the loss. This is a narrower, fact-specific argument, and it depends on what security existed and what happened to it, not just on the fact that some security was registered.
When does the clock start running?
Ontario’s basic limitation period is two years from discovery. For a guarantee payable on demand, the Ontario Court of Appeal held in Bank of Nova Scotia v. Williamson that the clock runs from the date the funder actually makes demand on the guarantor, not from the date the business first defaulted. Practically, that cuts against guarantors more often than it helps them: a business default from years ago does not make a recent demand on the guarantee stale. A signed acknowledgment or part payment restarts the two-year period again.
If you end up paying: your rights against the business
A guarantor who pays is not left with nothing. Under Ontario’s Mercantile Law Amendment Act, a person who pays a guaranteed debt is entitled to have the creditor’s judgment and security assigned to them, stepping into the funder’s position to pursue the business for what was paid. Where there is a co-guarantor who has not paid their share, the same principle supports a contribution claim against them. Against an insolvent business this may be worth little, but where there are other assets, or other guarantors, it is a real right, not a consolation prize.
Frequently asked questions
Can the funder sue me without suing my company first? Usually yes. Most MCA guarantees are guarantees of payment, letting the funder pursue the guarantor directly once the business is in default. Check the wording of your specific guarantee; it decides this, not a general rule.
I only signed in my role as an officer of the company. Am I personally exposed? It depends on whether a separate signature, in your own name and personal capacity, appears on the guarantee. A signature block showing only a corporate title is worth having reviewed against the Statute of Frauds’ writing and signature requirement.
The funder rolled a second advance into my balance without asking me first. Does that end my guarantee? It might, depending entirely on what the guarantee says about renewals, amendments and future advances. Most current agreements are drafted to allow exactly this, but not all are, and the specific wording controls the answer.
Do I still need to respond to the lawsuit while I sort this out? Yes. None of these questions pause the clock on your deadline to respond once you are served — generally 20 days in Ontario. Raise the guarantee defences in your defence; do not wait to raise them until after the deadline has passed.
Have the guarantee read before you concede anything
What a personal guarantee actually says, on the specific document you signed, decides most of the questions above, not the general rules. Send us the guarantee and the funding agreement, and we will go through what you signed, what changed afterward, and whether the guarantee reaches as far as the funder says it does.
Sources: Statute of Frauds, R.S.O. 1990, c. S.19, s. 4 · Mercantile Law Amendment Act, R.S.O. 1990, c. M.10, s. 1 · Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415 · Bank of Nova Scotia v. Williamson, 2009 ONCA 754 · Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, ss. 4, 5, 13 · Execution Act, R.S.O. 1990, c. E.24, s. 2 · O. Reg. 657/05, prescribed exemption amounts · Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 60.07 · Electronic Commerce Act, 2000, S.O. 2000, c. 17. General information for Ontario, not legal advice.
General information for Ontario, not legal advice. Reviewed by Angelos Spingos. Last reviewed October 1, 2026.