What should I check about a personal guarantee I signed for my company?

What is a personal guarantee, in plain terms?

A personal guarantee is a promise you make as an individual, not as a director. GOV.UK's director information hub explains it in its page on personal guarantees: it is a legally binding agreement that the director will personally repay a debt if the company fails to meet its financial obligations in relation to that debt.

The same page says many lenders, landlords and suppliers ask for one to reduce their risk. It is more likely when the company is new, has a short trading history, has a poor credit rating or none at all, or when the amount involved is large. So if you signed one, it may date from the company's early days or from a large facility, and be worth looking for.

GOV.UK says that providing a guarantee could expose a director's personal assets to potential claims. It also says you must fully understand the terms of a personal guarantee before agreeing to it, including how much you are personally liable for if the company cannot pay the debt. If you have already signed, the same question is still worth answering. The answer is written in the document you signed, and it can differ from one guarantee to the next.

What kinds of guarantee are there?

GOV.UK describes three broad types. Read your own guarantee to see which description fits it.

Type	What GOV.UK says	The question to ask about yours
Secured	Backed by a specific asset, with a charge against property	Which asset is named, and is anything registered against it?
Unsecured	Based solely on your own creditworthiness	Is there a limit on the amount, or is it open ended?
Joint and several	Multiple guarantors liable for the full debt	Who else signed, and what does the document say about each of you?

The table is a starting point for reading your own paperwork. It cannot tell you what any lender, landlord or supplier would do, because that depends on the wording and on the facts at the time.

Why is the guarantee separate from the company debt?

It is natural to assume a limited company's debts stay with the company. The director information hub page on personal and company debts draws the line clearly. It says you are responsible for any money owed by your company that has been personally guaranteed by you, and gives a finance agreement, an overdraft or a bank loan guaranteed by the director as examples.

So there are two relationships running side by side. The company owes the debt under its own agreement. You, personally, have a separate promise to repay that debt if the company does not. Whether a plan for the company's debts, such as a payment plan or new finance, changes anything under your guarantee depends on its wording, which is a question for your solicitor. That is why the guarantee deserves its own conversation, with its own adviser, rather than being folded into the company's.

How do you find every guarantee you have signed?

Start with a list of everyone who has given the company credit: banks, asset finance providers, landlords and key suppliers. GOV.UK names lenders, landlords and suppliers as groups that request guarantees, and says a request is more likely when the company is new or the amount is significant. Then go through the paperwork for each one, starting with anything signed when the company was young or when it took on a large facility.

A guarantee may not be a separate document with its own title. Check the full set of papers for each facility, lease or credit account, including the signature pages, and keep a copy of anything you find in one folder.

If you cannot find your copy, ask the creditor in writing for a copy of any guarantee it holds signed by you. Keep the request factual and short. Asking a creditor for a copy of your own documents is a reasonable first step, and a solicitor can check the wording before you send it.

If your worry is about your home in particular, HM Land Registry lets you search for property information for a property in England or Wales. GOV.UK says the title register usually includes whether the property has a mortgage. A solicitor can read the register alongside your guarantees and tell you what, if anything, it shows about them. Scotland and Northern Ireland have their own registers.

What should you note about each one?

Once you have the documents, put the key facts for each guarantee on a single page. You are not interpreting the law here, only writing down what the paperwork says so that an adviser can read it quickly.

What to note	Where to look
Who the guarantee is with, and the date you signed	The opening page and the signature pages
Which debt it covers: one loan, one lease, or more	The wording that describes the guaranteed debt
Whether there is a maximum amount	Any wording that sets a limit or cap
Whether it is secured on any asset	Any reference to a charge, mortgage or security
Who else signed it	The signature pages
What it says about ending the guarantee	Any wording on ending, release or notice
Any letters or demands received about it	Your post and email, kept in date order

The last two rows are easy to misread. Do not assume a guarantee ends when you resign as a director, when a loan is refinanced or when a lease is renewed. What happens depends on the wording of your guarantee, and a solicitor is the right person to read it.

What makes this harder than it needs to be?

Not knowing what was signed can be the first problem. A guarantee given years ago, in a bundle of papers during a busy week, can be easy to forget, and until it is found and read there is nothing concrete to plan around.

Assuming the worst without reading the terms causes trouble of its own. A general worry is hard to act on. Your guarantee has its own amount, its own conditions and its own creditor, and those details are what a solicitor will look at first.

Mixing the guarantee up with the company's position can happen when both are on your mind at once. Your duties as a director are a separate question from your own position under a guarantee, and our post on director duties when a company is struggling sets out what GOV.UK says about them. Your personal position under a guarantee is a separate matter for your own solicitor. Keeping the two apart makes each conversation clearer.

What questions should you take to a solicitor?

A solicitor's time is better spent on your documents than on finding them, so take the single page summary and copies of every guarantee. Useful questions include:

1. What exactly does each guarantee cover, and is there a limit?
2. Is any of it secured on my home or another asset?
3. If I resign as a director, or the company refinances, does anything change?
4. If another person signed too, what does the document say about how we are each treated?
5. Is there anything I should or should not do while the company works through its finances?

GOV.UK's page on personal guarantees, writing about guarantee insurance, adds that as with any legal or financial decision you should consider getting independent specialist advice.

When is this not the answer?

We cannot tell you what your guarantee means or what may happen under it. Reading and advising on a guarantee is a solicitor's work.

If the company may not be able to pay its debts as they fall due, speak to a licensed insolvency practitioner about the company's position as well. An accountant can help you pull together the figures both advisers will ask for.

If the worry is affecting your sleep or your health, tell your GP.

If your solicitor tells you a guarantee is limited and low risk, keep the summary with your other company records and look at it again whenever the company's borrowing changes.

Who can help you get organised?

Pulling this together while running a business takes time.

If it would help to have someone work through the paperwork with you, list every guarantee and prepare for the conversation with your solicitor, you can book a confidential consultation. We can help you get the paperwork in order. You can read more about our director strategy work.