Answer:
From a safety and soundness standpoint, it would be better to have a co-borrower/co-signer than a guarantor. Co-borrowers and co-signers are primarily liable for the debit. Guarantors are secondarily liable (meaning, you must exhaust your remedies against the primary borrowers first before you can go after the guarantors).
From a compliance stand point, you can't make anyone liable for a debt unless they apply [see Section 202.7(d)(1) and (d)(5) of Reg B]. There is a large exception to this rule for business debt. You can require the personal guaranty of partners, directors, officers and shareholders. However, you still can't make them a co-borrower or co-signer, they can only guaranty the debt. Refer to the Commentary to Section 202.7(d)(6) for more information.
First published on BankersOnline.com 4/16/07
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