A guaranty is an agreement in which a [[Guarantor | guarantor]] agrees to assume responsibility for a loan or other financial obligation if the primary borrower fails to make payments or otherwise defaults. The [[Guarantor | guarantor]] can be an individual, organization, or government entity and is typically financially responsible for repaying the debt if the primary borrower cannot. #### Banking Considerations Guarantees may be either **limited** or **unlimited**. Unlimited Guarantees may enable the lender to have recourse for not just the loan [[Principal | principal]], but also [[Accrued Interest | accrued interest]], and any other fees, including legal fees. Limited Guarantees may be limited to only a predefined portion of the loan amount and are typically negotiated on a case by case basis.