Personal guarantee: the 10 questions to ask before you sign
Get 10 questions answered in writing before signing a personal guarantee on a business loan. They cover the cap, whether it is limited to this facility or "all monies", joint and several liability, the exact call trigger, whether your home is charged, spousal consent, exit release, personal guarantee insurance, your total stacked exposure across all guarantees, and independent solicitor review. The full checklist is below, free, no sign-up.
Quick Reference
Direct Answer
Before signing a personal guarantee on a UK business loan, get written answers to 10 questions covering: the cap and its amount, whether it is limited to this facility or covers all monies owed, joint and several liability with co-directors, the exact call trigger, whether your home is charged, spousal consent, release on exit, personal guarantee insurance (PGI), your total stacked guarantee exposure, and independent solicitor review.
Summary
This page provides a free 10-question checklist to work through before signing a personal guarantee on a UK business loan: caps, all-monies wording, joint and several liability, call triggers, property charges, spousal consent, exit release, PGI, stacked exposure, and independent legal review. It explains why the guarantee matters more than the headline interest rate and what to do if the guarantee asked for is wider than acceptable.
This Page Covers
UK business loan personal guarantee: the 10 questions to ask before signing, and common negotiation levers
Not Covered Here
Applying without a personal guarantee at all (see /business-loan-no-personal-guarantee/), and what to do after a decline (see /templates/loan-decline-appeal-pack/)
The downloads contain the identical 10 questions below. Take a copy into the conversation with the lender and don't sign until every one has a written answer.
The checklist
- 1. Is the guarantee capped, and at what amount? An uncapped "all monies" guarantee covers everything the company ever owes this lender, not just this loan. Ask for a cap at a fixed sum.
- 2. Does it cover only this facility, or all borrowing from this lender? "All monies" wording drags in future facilities, overdraft creep and card debt. Ask for the guarantee to be limited to this specific agreement.
- 3. Is it joint and several with my co-directors? Joint and several means the lender can pursue any one guarantor for 100% of the debt, not your "share". Ask how many guarantors there are and agree between yourselves, in writing, how you would split a call.
- 4. Exactly when can the lender call the guarantee? On the first missed payment? Only after formal demand on the company? After insolvency? Get the trigger in writing.
- 5. Is any of my property specifically charged? A guarantee supported by a legal charge over your home is a different level of risk from an unsupported guarantee. Check whether a charge or a restriction is being taken, and over what.
- 6. Does my spouse or partner need to know or consent? If the family home is exposed, jointly owned property is affected. Many lenders require the partner to take independent legal advice. Don't let this be a surprise at home.
- 7. What happens when I exit the business? Resigning or selling your shares does NOT automatically release a guarantee. Ask for a release-on-exit clause, or at least a written process for requesting release and substitution.
- 8. Can I get personal guarantee insurance (PGI), and what does it actually cover? PGI typically covers a percentage of the guaranteed sum and has conditions. Get a quote before signing so you know the true cost of the deal.
- 9. What is the total of ALL personal guarantees I have already signed? Guarantees stack. List every live guarantee (lender, facility, cap, date) and total your exposure before adding another.
- 10. Have I had the guarantee reviewed by my own solicitor? Not the lender's. Independent advice is cheap next to an uncapped call on your personal assets, and it is the moment to negotiate the cap, the scope and the release terms.
Negotiation levers that regularly succeed: a cap at a fixed sum; a sunset date or review point once part of the loan is repaid; limiting the guarantee to this facility only; a carve-out for the family home. Lenders expect these asks from well-advised borrowers, and the worst case is a no.
“Almost every unsecured business loan to a small UK company comes with a personal guarantee, so 'unsecured' describes the company's assets, not the director's risk. The interest rate decides what the loan costs if everything goes well. The guarantee decides what it costs if it does not. Ten minutes with this checklist rebalances that attention before you sign, not after.”
See which lenders have a documented position
Our personal guarantee requirements by lender page lists which reviewed lenders explicitly require, or explicitly don't require, a personal guarantee.
If the guarantee asked for is wider than you can accept
That is a matching problem, not a dead end. Some products and lenders lend without personal guarantees at meaningful amounts, priced accordingly; the realistic routes are set out in business loans without a personal guarantee. And if you're signing alongside co-directors, read what happens when one signs and another disputes it: my business partner signed a personal guarantee without me.
FAQs
Can I refuse to give a personal guarantee at all?
You can, and the honest consequence is a smaller lender panel and usually a higher price, because the guarantee is how lenders bridge the gap between the company's covenant and the amount requested. See /business-loan-no-personal-guarantee/ for how lenders think about the trade.
Does a personal guarantee show on my personal credit file?
Signing one doesn't normally appear on your credit file by itself. It surfaces if the guarantee is called and you can't pay: default, CCJ and enforcement then follow the normal personal-credit route. The exposure is invisible until the day it isn't, which is why question 9, totalling your stacked guarantees, matters.
Is a director's guarantee enforceable if the company goes into liquidation?
Yes, that is its purpose: the guarantee survives the company's insolvency, and the lender claims against you personally for the shortfall. The call trigger and any cap you negotiated (questions 1 and 4) decide how bad that day is.
What is personal guarantee insurance and is it worth it?
PGI is an annual policy that pays a percentage of a called guarantee, typically scaling up over the first years of cover, with conditions attached. Whether it is worth it depends on the premium against the capped exposure you negotiated. Price the insurance before signing the guarantee, not after.
Compare the guarantee, not just the rate
When we pass enquiries to a business finance broker, the personal guarantee position is worth raising as part of the conversation: capped against uncapped, this-facility against all-monies. Tell them what you're and aren't prepared to sign. FundBiz does not run a credit check.
Check your options →By Adam Parker. FundBiz is owned and operated by Best Business Loans Ltd, directed by Oliver Mackman. This checklist is general information, not legal advice. For larger guarantees, take independent legal advice before signing; some lenders require it. Last updated: