This is archived content from the U.S. Department of Justice website. The information here may be outdated and links may no longer function. Please contact if you have any questions about the archive site.

84. Guaranty Agreements

The SBA, in connection with its loan program, commonly requires a guaranty agreement from individuals as part of its security. Its standard guaranty agreement is totally unconditional. Thus, liquidation of collateral or proceeding against the primary obligor is not required prior to suit on the SBA guaranty agreement. See Austad v. United States, 386 F.2d 147 (9th Cir. 1967); Feldstein v. United States, 352 F.2d 74 (9th Cir. 1965); United States v. Newton Livestock Market, Inc., 336 F.2d 673, 677 (10th Cir. 1964); United States v. Vince, 270 F. Supp. 591 (E.D. La. 1967), aff'd, 394 F.2d 462 (5th Cir.), cert. denied, 393 U.S. 827 (1968); United States v. Houff, 202 F. Supp. 471 (W.D. Va. 1962), aff'd, 312 F.2d 6 (4th Cir. 1962); United States v. Dubrin, 373 F. Supp. 1123, 1126 (W.D. Tex. 1974).

Settlement with other parties will not release the unconditional guarantor. See Commercial Credit Corp. v. Sorgel, 274 F.2d 449, 466-467 (5th Cir.), cert. denied, 364 U.S. 834 (1960); United States v. Dubrin, supra; Restatement of Security § 121(1)(b) Reporter's Note § 121, comment on (Tent. Draft No. 2 1965); 9B Uniform Laws Ann., Model Joint Obligations Act (1966).

[cited in USAM 4-4.470]

Updated December 7, 2018