Most UK directors don't realize they've already signed away their protection
Personal guarantees make you personally liable for company debts
Your home and assets are at risk even if the company fails
Banks and landlords can pursue you personally for decades
Personal guarantees are legal commitments that make you personally liable for your company's debts - completely bypassing limited liability protection
A legal promise that you'll pay company debts from your personal assets if the company can't
When you sign a personal guarantee, you're telling the creditor: "If my company can't pay this debt, I promise to pay it from my personal money, including my house, savings, and other assets."
Limited liability means nothing when you've signed personal guarantees
Your home can be repossessed to pay company debts
Guarantees survive liquidation - they don't disappear when the company dies
Joint guarantees mean you're liable for the full debt, not just your share
Banks almost always require personal guarantees for business loans and overdraft facilities
Risk: Your home and savings are security for business debt
Landlords typically require personal guarantees for business premises rental agreements
Risk: Liable for rent even after company closure, sometimes for entire lease term
Suppliers often require personal guarantees for credit accounts and payment terms
Risk: Personal liability for unpaid supplier invoices
Vehicle leases, machinery finance, and equipment rental agreements
Risk: Personal responsibility for outstanding finance even if equipment is repossessed
You're not powerless. There are legitimate strategies to minimize personal guarantee risks and protect your assets
Cap your exposure and negotiate better terms
💡 Example: Instead of guaranteeing "all sums," limit to £100,000 maximum
✓ Read every word carefully
✓ Negotiate caps and limits
✓ Add expiry dates
✓ Consider joint guarantees
✓ Get legal advice
✓ Spouse ownership structures
✓ Offshore protection trusts
✓ Investment in exempt assets
✓ Professional insurance
✓ Legal entity structures
Legally protect assets from guarantee claims
⚠️ Important: Asset protection must be done BEFORE problems arise
Insurance coverage for personal guarantee claims
💡 Many insurers now offer personal guarantee insurance from £2,000/year
✓ Directors & Officers cover
✓ Personal guarantee insurance
✓ Professional indemnity
✓ Trade credit protection
✓ Legal expenses cover
✓ Monthly cash flow monitoring
✓ Debt-to-income ratios
✓ Customer concentration risk
✓ Covenant breach alerts
✓ Professional health checks
Detect problems before they become guarantee claims
🎯 The goal: Act BEFORE guarantee calls become inevitable
Take these steps immediately to reduce your risk
List every personal guarantee you've signed and their total value
Calculate total guarantee exposure vs. your personal net worth
Start asset protection planning and consider insurance options
Set up early warning systems and regular guarantee reviews
Get expert answers to the most common questions about personal guarantees