How to validate personal guarantor for small business in retail space?

[Nikolas Engel]

Hello BP,

We bought a retail building last summer and inherited a small beauty business as a tenant. There have been no problems with paying rent. As their initial lease comes to an end, they want to exercise the option but change the personal guarantor. I asked for last two years of tax returns from the individual in question - now he is asking me for what amount I am looking for in his returns before sharing. He says that if that amount is not supported by his income then we might as well stay with the personal guarantor in place. 

This is the first time for me to deal with the validation of a personal guarantor - I believe that in order to qualify as a personal guarantor he needs to proof that is able to consistently produce monthly income of at least base rent plus NNN from a source not connected to this beauty business. Would you suggest to make him a co-guarantor to the existing guarantor in the case his income does not support being the only personal guarantor?

Any feedback on my approach? How do you usually validate a small business personal guarantor in your retail spaces? 

Thank you very much for sharing your experience! I deeply appreciate it!

[John McKee]

I find it more odd that the original guarantor want's to be replaced.  I wouldn't allow this to happen if they are still involved in the business.  Otherwise if you are just adding a guarantor then I don't think it's that necessary to dive into their numbers.