What is a personal guarantee and do I need one?

What a personal guarantee actually does

A personal guarantee is a separate contract in which a director agrees to settle the company's debt personally if the business defaults. Normally, a limited company is a distinct legal person and its directors aren't liable for its debts — that's the point of limited liability. A PG deliberately removes that shield for the specific loan it covers. If the company can't pay, the lender can pursue the guarantor's savings, and sometimes their home, up to the guaranteed amount. It is a serious personal commitment, not a formality.

Why some lenders ask for one

Lenders request personal guarantees to reduce their own risk and to ensure directors have skin in the game. They are most common on unsecured lending, with newer companies, or where trading history is thin. The trade-off is that the director carries the downside personally, which can put family assets at stake and affect your own credit standing. Before signing any guarantee, read exactly what it covers, whether it's capped, and whether it survives if you later leave the business. See how business loans affect personal credit.

Do you need one with Credicorp?

No. Credicorp lends to the UK limited company, not to you as an individual, so we do not require a personal guarantee. Your limited liability stays intact: if the loan is to the company, the company is responsible for it. This is core to how we work — see how no-personal-guarantee lending works and whether a limited company can borrow without a PG. You can apply knowing your home isn't being signed against the loan.

What this means for your company

If you're comparing offers, a personal guarantee is one of the most important terms to weigh — it changes who actually owes the money. No-PG lending keeps the borrowing where limited-liability law intends it: with the company. For directors who don't want personal assets exposed to ordinary trading finance, that distinction matters. Credicorp's working-capital loans are built this way by design, so the company borrows and the company repays.