Personal Guarantees

When you apply for funding for your company and you’re asked to provide a personal guarantee, it’s easy to assume you’ll never actually be called upon to repay the loan.

But all businesses can experience peaks and troughs and unexpected cash flow issues. So there’s always a risk of repayments defaulting to the personal guarantor. And some guarantee agreements are more onerous and riskier than others.

That’s why even if you have every confidence in your business, it’s sensible to take legal advice before you commit yourself.

For a confidential discussion with a solicitor, call us today on 01908 414990. Alternatively email us at or complete our free enquiry form, and we will call you back.

What is a Personal Guarantee by a Director?

A personal guarantee is an agreement made between a company director and a lender, supplier or commercial landlord. It’s a form of security to underpin a company’s debt repayments or rent.

As a director signing a personal guarantee, you’re making a promise to pay the amounts owing if, in the future, your company can no longer do so.

Under the terms of the finance agreement, your business will remain liable for monthly repayments. But if it becomes insolvent and can’t keep up with those repayments, responsibility for repaying the debt will pass to you.

What are the potential consequences of a Personal Guarantee?

If your company enters into insolvency and you’ve given a personal guarantee, the lender is likely to try to recover the outstanding debt from you.

Interest levels on large debts can soon mount up. To satisfy the lenders, you could find yourself having to sell your family home. And personal bankruptcy can become a real possibility.

How we can help

If you’re thinking of giving a personal guarantee, we can help you get clarity on the advantages and disadvantages of doing so and the risks of the proposed terms of an arrangement.

And if your business has gone into liquidation, we can help you reach an agreement with the lender.

Contact us today for a confidential discussion

Let us help you. We’re based in Milton Keynes but can advise and act for you wherever you are in England or Wales.