Personal guarantees

Can you borrow without
signing a guarantee?

Usually not, and any broker telling you otherwise is selling. Most unsecured business lending asks a director to stand behind it. There are real exceptions, they are narrower than the internet suggests, and it is worth knowing which is which before you apply.

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The honest position

What a guarantee is, and where you can avoid one

  • What you are actually signing

    A promise that if the company cannot pay, you will. It is a personal debt, enforceable against your own money and in some cases your home. It is not a formality, even though it is presented as one.

  • Where PG-free lending genuinely exists

    Smaller facilities, often under £25,000, and some revenue-based funding where the lender takes a share of card takings instead. The trade is a lower limit and a higher cost.

  • Limited guarantees are the usual middle ground

    Capped at a proportion of the balance, or split between directors. If a full guarantee is the sticking point, this is the thing to ask for, and it is negotiable more often than people realise.

  • Guarantee insurance exists

    Several insurers cover a share of a director guarantee for an annual premium. It is not free and it does not cover everything, but for a large facility it is worth pricing.

Want to know which lenders would look at you without one? Ask before you apply.

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FAQ

Common questions

Does unsecured mean no personal guarantee?

No, and this is the most common misunderstanding in business lending. Unsecured means no charge over an asset. The guarantee is a separate promise and most unsecured lenders still want one.

Can my home be taken?

If a guarantee is called and you cannot pay, a lender can pursue your personal assets, which can include your home. It is rare and it is the end of a long road, but it is the risk you are accepting. Take advice before signing anything you do not understand.

Will you tell me before I commit?

Yes. We tell you whether a guarantee is required, and whether it is capped, before anything is submitted. Nothing is signed on our site.

Is there a size below which nobody asks?

There is no universal threshold. As a rough guide, the smaller the facility the likelier a lender is to go without, and above £50,000 you should expect to be asked.

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Find out what you would be asked for

We confirm the guarantee position for your lender before anything is submitted.

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Where to next

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