Business loan with no personal guarantee
A business loan with no personal guarantee is possible in the UK, but rarely as a plain unsecured term loan. The workable route is a finance type with its own security: asset finance secured on the equipment, invoice finance against your debtor book, or revenue-based facilities against future sales. These reduce or remove the director guarantee, usually at a higher rate or a lower advance.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's guides and lender reviews.
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At a glance
- What a PG is
- A director's personal promise to repay
- Why lenders ask
- Little else secures an unsecured loan
- Best PG-free route
- Finance with its own security
- PG-light products
- Asset finance, invoice finance, some RBF/MCA
- Trade-off
- Higher rate, lower advance, tighter covenants
- Scope
- Ltd companies, LLPs and partnerships of four or more partners
What a personal guarantee is
A personal guarantee (PG) is a written promise by a director or owner to repay a business loan personally if the company can't. It sits outside the protection of limited liability. If the business fails, the lender can pursue the guarantor for the shortfall, potentially against personal savings, income or a home. Most guarantees are capped at an agreed figure rather than unlimited, and some directors take out separate PG insurance to cover the exposure. If you can't avoid signing one, work through our personal guarantee checklist, the 10 questions to get answered in writing before you sign.
Personal guarantee vs no personal guarantee
The difference is who carries the risk if the company defaults. With a PG, the director is personally on the hook up to the capped amount. Without one, the lender can only recover from the company and whatever asset or income the facility is secured against. That is why a no-PG structure almost always relies on real security doing the work instead: an asset, a debtor book, or a stream of future sales the lender can advance against and take first call on.
Why most SME lending asks for a director PG
A young or asset-light limited company often has little on its balance sheet for a lender to fall back on. An unsecured term loan is, by definition, not secured on anything, so the guarantee is how the lender bridges that gap and keeps the director aligned with repaying. It's standard practice across mainstream and specialist unsecured lending. The way to avoid a PG is usually not to argue it away on an unsecured loan, but to pick a product where the lender already holds security.
Finance types that are genuinely PG-light or PG-free
These products carry their own security, so a personal guarantee is often reduced, capped low, or not required at all. The position varies by lender and by the strength of the deal, so always confirm the guarantee terms on the specific offer.
| Finance type | What secures it instead of a PG | Typical PG position |
|---|---|---|
| Asset finance | The asset being funded (equipment, vehicle, machinery) | Often limited, capped low, or waived |
| Invoice finance | The debtor book / unpaid invoices | Frequently reduced or PG-free on stronger books |
| Revenue-based finance | A share of future online sales | Sometimes PG-light; income does the work |
| Merchant cash advance | Future card-machine takings | Sometimes PG-light on strong card flow |
| Larger secured facilities | Commercial property or fixed charge | Can be structured without a PG at scale |
Source: FundBiz product structure overview
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### How PG-light finance types are secured, and where the personal guarantee typically sits. Position varies by lender and deal; confirm on each offer. | Finance type | What secures it instead of a PG | Typical PG position | | --- | --- | --- | | Asset finance | The asset being funded (equipment, vehicle, machinery) | Often limited, capped low, or waived | | Invoice finance | The debtor book / unpaid invoices | Frequently reduced or PG-free on stronger books | | Revenue-based finance | A share of future online sales | Sometimes PG-light; income does the work | | Merchant cash advance | Future card-machine takings | Sometimes PG-light on strong card flow | | Larger secured facilities | Commercial property or fixed charge | Can be structured without a PG at scale | Source: FundBiz product structure overview
For equipment and vehicles, asset finance is the cleanest PG-light route because the asset is the security. For unpaid invoices, invoice finance advances against the debtor book. For online sellers, revenue-based finance and, for card-led businesses, a merchant cash advance lean on future income rather than a full guarantee.
The trade-offs of going PG-free
Removing the personal guarantee shifts risk back to the lender, and that shows up somewhere in the terms. Expect one or more of the following:
- A higher headline rate to price in the extra risk.
- A lower advance: a smaller percentage against the asset value or invoice book.
- Stronger covenants and monitoring, such as tighter reporting or a debenture over company assets.
- A narrower lender pool, since not every funder will lend without a guarantee.
None of this makes a PG-free structure wrong. For many directors, protecting the personal position is worth a higher cost or a lower advance. The point is to compare the total cost and the security terms side by side, not just the headline that says no personal guarantee.
Which lenders don't require a personal guarantee
It depends on the product and the deal rather than a fixed list. Asset and invoice funders are the most likely to lend PG-light because they hold real security; unsecured term lenders are the least likely. Rather than chase a specific lender's policy, the faster path is to pick the finance type that fits your need, then ask which lenders will structure it without a full guarantee. See the lenders we list.
Frequently asked questions
Can I get a business loan with no personal guarantee in the UK?
Sometimes, but not usually for an ordinary unsecured term loan. Most UK SME lenders ask a director for a personal guarantee because the company has little else to stand behind the debt. Where a facility is secured on a specific asset or on future income, the security can do that job instead, so a personal guarantee is reduced or removed. Asset finance and invoice finance are the clearest examples.
What is a personal guarantee on a business loan?
A personal guarantee (PG) is a written promise by a director or owner to repay the loan personally if the company can't. It sits outside limited liability, so if the business fails the lender can pursue the guarantor for the shortfall, potentially against personal savings, income or property. Most guarantees are capped at an agreed amount, and some directors take separate PG insurance.
Which types of finance don't need a personal guarantee?
The genuinely PG-light options are the ones with their own security. Asset finance is secured on the asset being funded, so the guarantee is often limited or waived. Invoice finance is advanced against the debtor book. Some revenue-based finance and merchant cash advances lean on future card or sales income rather than a full PG. Larger property-secured facilities can also be structured without a personal guarantee.
What happens if I don't sign a personal guarantee?
If a lender requires a PG and you decline, the application usually stops there. The realistic route isn't to refuse the guarantee but to choose a finance type that doesn't need one, such as asset finance secured on the equipment, or invoice finance secured on your receivables.
Are no personal guarantee loans more expensive?
Often, yes. A lender carrying more risk without a personal guarantee tends to price it in through a higher rate, a lower advance against the asset or invoice, or tighter covenants. The trade is real: you protect your personal position, and the facility usually costs more or advances less. Compare the total cost and the security terms side by side before deciding.
Does a personal guarantee need to be witnessed?
Usually, yes. A personal guarantee is normally executed as a deed, and lenders typically require the guarantor to sign in front of an independent adult witness who isn't a party to the agreement or a close family member. The witness adds their name, address and signature. Some lenders now accept remote or electronic witnessing, so confirm the exact requirement on the specific guarantee document before signing.
Do all business loans require a personal guarantee?
No. Most unsecured term loans to smaller limited companies do, because there's little else for the lender to fall back on, but plenty of facilities don't. Finance secured on an asset, an invoice book or future income is the most likely to be PG-light or PG-free, because that security does the job the guarantee otherwise would.
Is a guarantor the same as a personal guarantee?
They're related but not identical. A personal guarantee is given by a director or owner of the borrowing company itself. A guarantor is any third party who agrees to cover the debt, which might be a director but could also be another person or a parent company. Asset finance and invoice finance can often avoid needing either, because the facility is secured on the asset or the receivables rather than on a person.
Who is eligible for finance through FundBiz?
UK limited companies, LLPs and partnerships with four or more partners. Sole traders are out of scope. Lenders look at trading history, turnover and the asset or income the facility is secured against. FundBiz does not run a credit check. If you send an enquiry, the broker or a lender may run their own checks, which can include a credit search, and they should tell you before they do.
Will you be asked for a personal guarantee?
It depends on what the facility is secured against. Where there's no asset behind the debt, a director’s guarantee is normally how a lender keeps the decision-maker aligned with repaying.
A personal guarantee is a written promise by a director or shareholder to repay the facility personally if the company can't. It sits outside the protection of limited liability, which is precisely why it is worth understanding before you apply rather than at signing.
What changes the answer
- What stands behind the debt. Asset finance is secured on the asset being funded and invoice finance is advanced against the debtor book, so guarantees there are more often limited or waived.
- Trading history and filed accounts. A longer record of filed accounts and consistent turnover gives a lender more to underwrite without reaching for a guarantee.
- Facility size relative to the business. The larger the exposure against the company’s own numbers, the more likely a guarantee is asked for.
- Lender policy. This varies genuinely between lenders on identical cases, which is the practical argument for comparing rather than accepting the first offer.
What to check before you sign one
- Whether the amount is capped or unlimited, and whether it covers interest, fees and costs as well as the principal.
- If there's more than one director, whether liability is joint and several, meaning any one of you can be pursued for the whole amount.
- When the guarantee is released, and whether it survives repayment, refinancing or your leaving the business.
- How it interacts with any existing debenture or charge already granted to another lender.
A guarantee is a personal legal commitment. Take independent legal advice before signing one. FundBiz is not a lender and does not give advice: this is information only.
See what you can raise without a full personal guarantee
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