A personal guarantee is essentially a promise from you, the business owner, to take personal responsibility for repaying the remainder, or a proportion of the loan, if your business can't, up to the limit of the PG. This means your personal assets, like your home or savings, could be at risk if your business fails to make the repayments. It’s worth noting, however, that this is the worst case scenario. Usually lenders will try to work with a business to settle the matter before taking extreme measures. In most cases, the business will need to be officially in default of the loan (as defined by the loan agreement) before the personal guarantee is called upon.
Yes, you can! Unlike traditional business loans that often require personal guarantees, there are alternative options available. Some unsecured business loans and invoice & trade finance lenders, with no personal guarantee, offer a way to access funds without putting your personal assets on the line.
There are several different types of no personal guarantee business products available in the UK market. Which option is suited to your business could depend on how you operate, how you take payments from customers, and what you need to use the funds for.
Here are some examples of the types of loan you could get with no personal guarantee:
Asset finance allows you to borrow money against your business assets, like equipment, vehicles, or cars. It's a great option if you need to invest in assets to grow your business but don't want to put a strain on your cash flow. As the loan is secured against the asset, there’s very little risk to the lender, which is why many feel comfortable offering this kind of loan without a personal guarantee.
Invoice finance, which you might also know as invoice factoring or discounting, allows you to advance the money owed to your business in outstanding invoices. This means you can access cash which would otherwise be tied up while you wait for your customers to pay. There are different types of invoice finance available, giving you the flexibility to use your whole debtor book, or just specific invoices. This can be particularly beneficial if your business has long payment terms, or seasonal cash flow fluctuations. Because the advanced funds are secured against your outstanding invoices, some lenders won’t require a personal guarantee.
Many lenders can offer no personal guarantees for established businesses whose profitability is predictable. For younger companies, lenders can offer innovative lending products in order to provide access to flexible finance. With no personal guarantees required, these are truly unsecured loans.
At Capitalise we work with 100+ business lenders, allowing you to compare your options and find the most suitable loan for your needs. If you’re looking for an unsecured loan with no personal guarantee, just start a search for funding. Our funding specialists will work with you to find the right option. Plus with our integrated systems, your application will be streamlined, designed to allow you to draw down funds fast
At Capitalise, we’ve worked with 1000s of businesses, helping to secure over £1.8 billion in funding offers.
In a recent case, we helped a wholesale media company to access the capital they needed to grow quickly. The business had been presented with an opportunity to take on the operations of another company, but they lacked the working capital to expand so quickly. With a fast application process, we were able to provide the business with a revolving cash facility secured against selected invoices of £153,000 with no personal guarantee in just a few days. This enabled the business to successfully take over the other company, ultimately saving 20 jobs.
Here are some key features of the loan:
Want to see what your business could do with a fast injection of capital? Simply start a search for funding to see how much you could be eligible to borrow.
✅ Know your business credit score
✅ Understand the factors impacting it
✅ Alerts on risks to your profile
✅ All features from as low as £19/month
You can use a no personal guarantee business loan for various business purposes, such as:
Advantages:
Disadvantages:
How much of a role your business credit score plays will depend on the lender and finance product you apply for. Some lenders may consider other factors, for example the creditworthiness of your customers if you opt for no personal guarantee invoice finance. In these cases, a poor business credit score might not prevent you from accessing finance, however you could be subject to more expensive interest rates.
Many lenders will assess your business' financial health to determine your eligibility and loan terms. In these instances, your business credit score can be a defining factor.
In general, maintaining a good business credit score can improve your chances of securing favourable loan terms and accessing the capital you need to support the growth and success of your business. That’s why it’s important to continuously track your credit score and look for ways to improve it.
No, not all business loans require a personal guarantee. If you’re looking for a no personal guarantee business loan, simply start a search for funding. Our specialists will help you to understand what you could be eligible for and help you to apply for a no PG loan.
A director's guarantee is similar to a personal guarantee but specifically applies to a company’s director(s). It holds the directors personally liable for the company's debts if the business isn't able to settle them for whatever reason.
Personal guarantee insurance is a type of insurance that protects you, as a business owner, in case you're unable to repay a loan and your personal assets are at risk. It provides an added layer of security and peace of mind, helping mitigate the financial risks associated with personal guarantees, but comes with a premium to pay for the policy.
No, whilst in theory it may be possible, it's likely safer to assume this isn’t the case and that a startup business may need to provide a personal guarantee.
It depends on your individual circumstances and risk tolerance. While offering a personal guarantee may increase your chances of securing financing or obtaining more favourable loan terms, it also involves potential risks to your personal assets. Future lenders to your business may also require a PG, and if you have already offered one to previous lenders, they may not believe it is worth as much. So you may want to hold your PG back until you really need to use it. If you’re unsure whether to offer a personal guarantee, you can speak with a dedicated funding specialist when you search for a loan with Capitalise, they’ll help you to fully understand your options.
If you default on a business loan without a personal guarantee, the lender typically can't go after your personal assets. However, they may still pursue other avenues to recover their funds, such as taking legal action. It's important to carefully review loan agreements and understand the consequences of defaulting before accepting an offer.
