No-personal-guarantee loans: what's the trade-off?

2 min read

Protects your assetsNo claim on you

Usually dearerLender risk is higher

Stronger profile helpsEarns the option

Weigh the tradeSafety vs cost

What a guarantee-free loan gives up and gains

A personal guarantee lets a lender pursue the director's own assets for the company's debt, cutting through limited liability. A loan without one keeps that protection intact — your personal position is not on the line if the company cannot repay. In exchange, the lender has less to fall back on, so it carries more risk, which it prices into a higher rate or tighter terms. See how security affects price.

Who can access it

Because the lender is taking on more, guarantee-free lending is easier to obtain the stronger your business looks: an established trading history, solid filed accounts, healthy coverage and a good credit profile all help. A newer or thinner-filed company is more likely to be asked for a guarantee, or to pay more to avoid one. Strengthening the application is how you earn the option. See the no-guarantee loans guide.

Making the call

The decision is about how much the protection is worth to you against its price. For a director who cannot risk personal assets, paying a little more to avoid a guarantee is money well spent. For an established company confident in repayment, accepting a guarantee for a lower rate may be a reasonable trade. Neither is wrong — it depends on your risk tolerance and your accounts. Compare a guaranteed and guarantee-free quote on total cost.

To explore what you qualify for, apply to Credicorp.

Frequently asked questions

Are no-guarantee loans much more expensive?

Usually somewhat more, because the lender has less security and carries more risk, which it prices in. The size of the difference depends heavily on your profile: a strong, established company may pay only a little more to avoid a guarantee, while a weaker one faces a bigger gap or cannot access guarantee-free lending at all. Compare both options on total repayable to see the real cost of the protection.

Does a strong company still need a personal guarantee?

Not always — the stronger your trading history, accounts and credit profile, the more likely a lender is to offer terms without a personal guarantee, or to make avoiding one affordable. Guarantees are most commonly required from newer or thinner-filed businesses where the lender needs extra reassurance. Building the strength of the business is the surest route to guarantee-free options.