Almost every director who borrows for a UK limited company signs a personal guarantee without fully reading it. This guide is the read-first version: what a PG actually does, how it's enforced, and the terms that are more negotiable than lenders let on.
What a personal guarantee actually is
A PG is your personal promise to repay the company's debt if the company cannot. It converts a limited company loan — where your liability would normally stop at the company — into a personal liability for the guaranteed amount. It is typically signed alongside a loan agreement and is separate from any security (like a charge over your home) that may support it.
Joint vs joint-and-several — the difference that matters
| Structure | What it means for you |
|---|---|
| Several only | Each guarantor is liable only for their stated share. Best case for directors. |
| Joint and several (most common) | The lender can recover the entire amount from any one guarantor. If your co-director disappears, you're on the hook for 100%. |
| Sole PG | One director carries the whole exposure — common where one person clearly runs the company. |
What's actually negotiable
- A cap — the guarantee limited to a fixed sum or a percentage of the facility, instead of "all monies".
- Amortising reduction — the guarantee shrinks as the balance is repaid.
- Time limit — the guarantee expires after a set number of consecutive payments.
- Several instead of joint-and-several — harder to get, but ask.
- Exclusions — e.g. the guarantee covering principal and interest but not the lender's full enforcement costs.
None of these are volunteered. All of them are answered when asked.
The uncomfortable question worth asking yourself: "If this company fails in 14 months, can I personally absorb the guaranteed amount?" If the honest answer is no, the right fix is a smaller facility — sized to the working capital calculation — rather than a bigger guarantee.
Enforcement, step by step
- Company misses payments → default is triggered under the loan agreement.
- Lender demands payment from the guarantor(s) under the PG.
- If unpaid, the lender can obtain a county court judgment against you personally.
- Enforcement follows: attachment of earnings, charging order over property (including your home, if the guarantee and any supporting security permit), or ultimately bankruptcy.
Take independent legal advice before signing any guarantee backed by your home. Some lenders require you to confirm you've done so — that requirement exists for a reason.
Where Solvo Funding fits
Different lenders on our panel take very different positions on guarantees — caps, several structures, even PG-free products at higher rates for stronger files. Tell us how you think about personal risk and we'll route the application to lenders whose guarantee structure matches, rather than discovering it at signature. £10k–£500k, no cost to apply.
Frequently asked questions
Can I get a business loan without a personal guarantee?
Sometimes — larger established companies, or revenue-based products where the guarantee is priced into the rate. For most SME unsecured lending, a PG is standard; the realistic choice is between a capped PG and a higher rate.
What does joint and several mean?
The lender can pursue any one guarantor for the entire amount, not just their share.
Can a PG be capped or time-limited?
Yes — caps, amortising reductions and payment-count expiries are all negotiable structures. Lenders rarely volunteer them; they respond when asked.
What happens on enforcement?
Personal demand → county court judgment → enforcement against personal assets, potentially including your home if the security permits. Take independent legal advice before signing.
Last updated: 22 August 2026. General information about how personal guarantees work in the UK, not legal advice. Guarantees are significant legal commitments — read them, and where property is involved, get independent legal advice before signing.