Exhibit B

                           GUARANTY OF HOMEGOLD, INC.
                             AND SECURITY AGREEMENT

         This Guaranty & Security Agreement (the "Guaranty") is entered into to
be effective as of December 31, 2000, by and between HomeGold, Inc., a South
Carolina corporation ("HGI"), and Carolina Investors, Inc., a South Carolina
corporation ("CII"), in connection with that certain Assumption of Debt and
Contribution to Capital Agreement (the "Agreement") effective as of even date
herewith by and between HomeGold Financial, Inc., a South Carolina corporation
("HFI"), HGI, and CII as a condition of CII's entry into the Agreement.

         HGI hereby irrevocably, fully and unconditionally, guarantees to CII,
its successors and permitted assigns the full and prompt performance by HFI of
all of its obligations under, and the full and prompt payment by HFI of all
amounts owed by it under, that certain Revolving Promissory Note dated December
31, 2000 with HFI as borrower and CII as lender (the "Revolving Promissory
Note"). This Guaranty is a continuing guaranty and shall remain in full force
and effect as long as the Revolving Promissory Note remains outstanding.

         In order to secure the payment and performance in full of the
obligations of HGI to CII under the terms of this Guaranty, HGI hereby grants to
CII a security interest in and to (i) all equipment of HGI currently located in
the State of South Carolina as of the date hereof, wherever hereafter located,
and all equipment hereafter acquired by HGI in the State of South Carolina,
whether located elsewhere after such acquisition, (ii) all notes receivable of
HGI other than notes receivable now or hereinafter securing any other debts of
HGI or subject to any loan purchase facility of HGI and (iii) any and all
proceeds from any and all of the foregoing collateral (including without
limitation, all payments under insurance, or any indemnity, warranty, guaranty
or insured closing letter, payable by reason of the loss or damage to or
otherwise with respect to any of the foregoing).

         The obligations of HGI under this Guaranty are independent of the
obligations under the Revolving Promissory Note and any other related documents,
and a separate action or actions may be brought and prosecuted against HGI to
enforce HGI's obligations under this Guaranty, irrespective of whether any
action is brought against HFI or whether HFI is joined in any such action.

         HGI hereby waives, to the extent permitted by applicable law, (i) the
benefits of promptness, diligence, presentment or demand of payment; (ii) notice
of acceptance and notice of the incurrence of any liability by HFI; (iii) notice
of any actions taken by HFI under the Revolving Promissory Note or any other
related agreement or instrument; (iv) all other notices, demands and protests,
and all other formalities of every kind in connection with the enforcement of
the covenants, agreements, or liabilities of HGI hereunder, the omission of or
delay in which, but for the provisions of this paragraph, might constitute
grounds for relieving HGI of its obligations hereunder; (v) any right to compel
or direct CII to seek payment or recovery of any amounts owed under this
Guaranty from any one particular fund or source; and (vi) any requirement that
CII protect, secure, perfect or insure any security interest or lien or any
property

                                       1


subject thereto or exhaust any right or take any action against the HFI or any
other Person or any collateral.

         HGI hereby irrevocably waives and agrees it will not exercise any and
all rights which it has or may have at any time or from time to time (whether
arising directly or indirectly by operation of law or contract) to assert any
claim against HFI on account of any payments made under the Revolving Promissory
Note, this Guaranty or otherwise, including, without limitation, any and all
existing and future rights of subrogation, reimbursement, exoneration,
contribution and/or indemnity to the extent that the exercise of such rights
would limit or impair the full performance of any and all obligations of HFI to
CII under the Revolving Promissory Note or of HGI to CII under this Guaranty. If
any amount shall be paid to HGI on account of such subrogation rights at any
time when any obligation or liability owed to CII shall not have been paid in
full, such amount shall be held in trust for the benefit of CII, shall be
segregated from the other funds of HGI and shall forthwith be paid over to CII
to be applied in whole or in part by CII against the liability owed to it,
whether matured or unmatured, and all such other expenses in accordance with the
terms of the Revolving Promissory Note.

         All costs and expenses (including reasonable attorneys fees which
attorneys fees shall be based upon the usual and customary hourly rates of CII's
counsel and not based upon a percentage of the amounts owing under this
Guaranty) incurred by CII in exercising any right, power or remedy conferred by
this Guaranty or in the enforcement thereof, shall become part of the
obligations of HGI secured hereunder and shall be paid by HGI to CII or repaid
from the proceeds of the sale of the collateral hereunder.

         CII shall not by any act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies hereunder, and no waiver shall be
valid unless in writing, signed by CII, and then only to the extent therein set
forth. A waiver by CII of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which CII would otherwise
have on any future occasion. No failure to exercise nor any delay in exercising
on the part of CII, any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.

         Any provision of this Guaranty which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

         This Guaranty shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of South Carolina applicable to
contracts made and to be performed therein without consideration as to choice of
law.

                                     * * * *

                                       2


          IN WITNESS WHEREOF, each of the parties hereto has caused this
Guaranty to be executed on its behalf by its duly authorized officer as of the
date first set forth above.


HOMEGOLD, INC.                              CAROLINA INVESTORS, INC.

By:                                         By:
    -------------------------------             ------------------------------

Name:                                       Name:
      -----------------------------               ----------------------------

Title:                                      Title:
       ----------------------------                ---------------------------

                                      3