Guarantee of a principal and interest on a loan

[Olga Levin]

Hello BP community,

Hoping someone has some light to shed on this question:

Can  an investor guarantee the principal and interest on a private money loan?

I was told by a rehabber that it is illegal, but am not able to find any information supporting that claim. Now structuring our own deals, we want to offer such guarantees to our private money partners, but want to make sure they are kosher.