When you sign a loan note or other obligation as a corporate officer, you are not personally liable for repayment. You are obligating the corporation, but not yourself. Only when you sign your name alone do you become personally liable for the debt. Sometimes, a lender may ask that you sign as a corporate officer and also personally, which gives your personal guarantee along with the company as repayment options.
Corporate Signature Significance
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When you sign as President, Treasurer, Secretary or a different corporate officer, you obligate the corporation to repay the promissory note. Your signature may look like this: John Smith, President. Legally, the President is obligating the company to pay this debt. Your name and signature are required when you are the person who has the corporate title that company bylaws permit to obligate the organization contractually.
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Personal Signature Without Corporate Title
When you sign a promissory note with your name only, you are obligating yourself to repay the loan. If the loan was made to the corporation, the organization is primarily liable, but should repayment problems occur, the lender can collect the debt from you personally. Any assets, e.g., personal home, may be at risk if the lender sues you. Always include your title when signing a promissory note or any corporate obligation.
Both Signatures Sometimes Required
Lenders sometimes require new or very small corporations to have a signature of a corporate officer and a personal signature of the majority owner. While you should try to avoid this whenever possible, banks and business lenders may ask and require both corporate officer and personal signatures as conditions of making the loan. You will then have the option to agree or refuse to offer both corporate and personal guarantee signatures.
Corporate Officer Changes
If the corporate officer who signs the promissory note is John Smith, who was the President, but, before the loan is paid off, a different person becomes the President, nothing changes. This legal issue protects both the lender and the corporation. Since the legal President signed the promissory note, whoever is the President during the life of the loan is immaterial. As long as the appropriate corporate officer signed the note contract was made and the proceeds disbursed, the corporation is liable for repayment.