Personal Guarantee

How personal guarantee works

The document defines the guaranteed liabilities, any cap, duration and enforcement terms. It may cover one facility or wider obligations and may be accompanied by an indemnity. Independent legal advice helps the guarantor understand the actual exposure.

Practical UK business example

A director considers guaranteeing a company loan. Before signing, they check whether liability is capped, whether costs and interest sit outside the cap and how release can be obtained.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

A guarantee may support an application but transfers risk to the individual. Company limited liability does not remove an obligation that the director separately accepts.

Limitations and common misconceptions

A director’s guarantee is usually a personal guarantee given by a director, not a separate finance product. Resigning or selling shares does not necessarily release an existing guarantee.

Discuss business borrowing to discuss how the structure relates to your business.