Do you need a personal guarantee to lease flex space?
On a small-bay unit you should expect to sign one, because the entity on the lease usually has no financial record a landlord can underwrite. You formed the LLC, opened a business checking account, and the only credit in the company's name is a fuel card and a net-30 with one supplier. A landlord reading that file is looking at a blank page, and the guarantee is how the lease gets signed anyway.
What does a personal guarantee actually put at risk?
Your personal assets, for the rent still owed across the remaining term rather than the one month you missed. A landlord who takes the space back in month fourteen of a sixty-month lease can pursue you for the forty-six months left, plus the triple-net charges riding along, plus unamortized finish-out spent on your unit, plus attorney's fees. That stack is why a demand letter runs several times what the tenant expected. Texas homestead protection keeps a judgment creditor largely away from your primary residence and does nothing for a savings account.
Why does a small-bay landlord ask for one at all?
Because there is almost nothing else to underwrite on a young Texas entity. An LLC at or below the no-tax-due threshold, which the Texas Comptroller sets at $2,650,000 for report years 2026 and 2027, files a Public Information Report or an Ownership Report and reports no revenue figure at all. So a company can be three years old and profitable and still hand a landlord a filing with no numbers on it.
Census Bureau Business Formation Statistics counted 578,926 seasonally adjusted business applications nationally in July 2026, and only 35,024 of those planned to pay wages. Most new entities are one person with an EIN, and that is the profile walking into a 1,500 SF bay. The landlord underwrites you because you are the only party with a credit file.
What will a landlord take instead of a full personal guarantee?
Cash, a cap, or a deadline, and most landlords will trade one for another if you raise it before the lease is drafted. These are the substitutes that get signed.
| Instead of an open guarantee | What you put up | What the landlord gives up | Fits when |
|---|---|---|---|
| Term-limited (burn-down) guaranty | Nothing at signing; you stay personally liable for roughly the first 12 to 24 months | All exposure after the burn-off date | You expect a clean payment record by year two |
| Capped-dollar guaranty | Nothing at signing; liability stops at a stated figure, often 6 to 12 months of gross rent | Everything above the cap | You can absorb a known number and not an open one |
| Good-guy guaranty | Nothing at signing; you stay liable through the day you return the keys with rent current | Damages for the balance of the term | You want a clean exit more than a cheap one |
| Enlarged security deposit | Cash held for the term, commonly several months of gross rent rather than one | Recourse past the deposit | You hold cash and would rather not sign personally |
| Prepaid rent | First and last month, or several months paid at signing | Carrying you on credit early in the term | The business is seasonal and front-loaded |
| Bank letter of credit | Your bank ties up cash or collateral in the stated amount | Recourse past the draw | Your bank will issue one at a cost you can price |
A burn-down and a cap stack together, and the pair is the cheapest ask because neither costs you cash today. Get both into the guaranty itself, since a side letter promising a future release is worth whatever the signer is worth. What a burn-off in month 24 is worth turns on how long a flex space lease should be, because it means one thing on a three-year term and another on a seven-year one.
Does the guarantee end when you sell the business or assign the lease?
No, unless the guaranty document releases you in its own words. The guaranty is a separate contract from the lease, so an assignment moves the tenant obligations to the buyer and leaves your signature where it was. Owners find this out at closing, after the deal is priced.
Standard forms go further and bind the guarantor through renewals, amendments, and holdover, so the buyer of your business can renew for five more years and your original signature reaches the new obligation without anyone calling you. Ask for a release on assignment conditioned on the assignee meeting a stated financial test, and for language capping you at the term as it stood the day you signed. Both are ordinary requests, and both get refused once the lease is out for signature.
How does ScaleUp handle guarantees at Rockwall and McKinney?
We read the operation before the balance sheet, because the eight tenant categories we build for run from auto services and trade contractors through showroom, food and beverage, light manufacturing, and e-commerce. Those businesses hold their value in equipment, inventory, and a customer list rather than in a filing. Rockwall Flex Park is 30 units of 1,500, 2,000, and 3,000 SF at 4156 N Goliad St, delivering Summer 2027, and the McKinney park at 1990 N McDonald St breaks ground Q4 2026.
One structural difference shapes what we can offer. Most flex parks are built on a construction loan, and the lender's covenants set floor terms on lease length, tenant credit, and guaranties, so the landlord across the table is often passing along a requirement they cannot waive. We build with 100% equity and no bank debt, which is what riba-free means in practice: no interest-bearing financing, and no lender behind us setting guaranty policy. The answer on a burn-down or a cap is ours to give. Our standard guaranty form is [[CONFIRM: ScaleUp standard guaranty form and default term]], and the deposit-for-guaranty trade we accept is [[CONFIRM: ScaleUp security deposit multiple accepted in place of a personal guarantee]].
What should you read in the guaranty before you sign it?
Six lines decide almost all of the exposure, and a Texas attorney should read them with you.
- Whether liability is capped, and whether the cap includes triple-net charges and attorney's fees
- Whether it burns off on a date, on a payment record, or never
- Whether it survives assignment, and what the assignee must prove to release you
- Whether it reaches renewals, expansions, and holdover you have not agreed to
- Whether partners sign jointly and severally, which lets the landlord collect the whole amount from whichever one has money
- Whether the landlord must pursue the business first, or can come straight to you
Price the guaranty next to the rest of the deal, because a landlord who drops the guarantee and raises the rate has charged you for it. Count the finish-out dollars too, since unamortized finish-out is usually the largest single line in a default claim. The rest belongs on the flex space lease checklist, next to the triple net math and who pays for the finish-out.
FAQ
Do you need a personal guarantee to lease flex space?
On a small-bay unit you should expect to sign one, because the entity on the lease usually has no financial record a landlord can underwrite. A Texas LLC with total revenue at or below the no-tax-due threshold files a Public Information Report or Ownership Report and reports no revenue figure at all, so a profitable three-year-old company can still show a landlord nothing. The guarantee is how the landlord gets a party with a credit file onto the paper.
What will a landlord accept instead of a full personal guarantee?
Cash, a cap, or a deadline. The common substitutes are a term-limited guaranty that burns off after 12 to 24 months of clean payment, a capped guaranty that stops at a stated dollar figure such as six to twelve months of gross rent, a good-guy guaranty that ends when you hand back the keys with rent current, a security deposit raised to several months of gross rent, prepaid rent at signing, or a bank letter of credit. Ask before the lease is drafted, because the terms are far easier to set than to change.
Does a personal guarantee end when you sell the business or assign the lease?
No, unless the guaranty document releases you in its own words. The guaranty is a separate contract from the lease, so assigning the lease moves the tenant obligations and leaves your signature where it was. Most standard guaranty forms also state that the guarantor stays bound through renewals, amendments, and holdover, which means a term you never negotiated can extend the exposure you signed for.
Want the guaranty terms before you commit?
Tell us how long the entity has been operating and what you can put up in cash, and we will tell you what the guaranty looks like on a Rockwall or McKinney unit. See the Rockwall and McKinney units and how each one is delivered.
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