Glossary
Personal guarantee
Your personal promise to repay the business's debt if the business cannot. Standard in SME lending, and the reason the corporate veil is thinner than it looks.
In plain English
A personal guarantee makes the director or owner personally liable for the company's facility if the company fails to pay. For small and medium business lending it is close to universal: the lender wants a person, not just a company, standing behind the debt.
Guarantees are often supported by security over personal assets, commonly the family home, which is what people mean when they say the house is on the line. What exactly is guaranteed, for how much, and what security supports it are contract questions for your solicitor before anything is signed.
Why a lender cares
From the credit side, a guarantee is only as strong as the guarantor's position, so the assessor looks at the whole picture: personal commitments, other guarantees already given, assets and income beyond the business. That is why our group servicing workbooks consolidate the business and personal position into one view, the way the assessor will.
Where this term takes you
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