Director Advice on Personal Guarantees on Loans and Liability

A personal guarantee (PG) is often required when taking out a business loan or lending facility as it provides security to the lender if the loan defaults.

As a personal guarantee reduces the risk for the lender, it often unlocks access to competitive rates that can be appealing to business owners.

Understanding a personal guarantee for business finance

If you sign a personal guarantee agreement, you could be held personally liable for the loan if the business runs into financial difficulty and can no longer repay the loan. If you default on the loan, your personal assets could be seized to raise money to repay the debt.

If your company is insolvent and enters liquidation, the personal guarantee will still apply and you will be required to personally repay the debt.