No personal guarantee business loans

What is a personal guarantee?

A personal guarantee (PG) 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. 

Can I get an unsecured business loan with no personal guarantee?

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.

What no personal guarantee options are there? 

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

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

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. 

No personal guarantee business loan: a case study 

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: 

• Unsecured, no personal guarantee or debenture required

• No paperwork, only Open Banking required

• No requirement for a Trust Account

• No setup fee

• Confidential facility

• Can sit alongside other business loans

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.

What can I use an unsecured no personal guarantee business loan for?

You can use a no personal guarantee business loan for various business purposes, such as:

• Expanding your business: Whether you want to hire new staff, open a new location, or invest in marketing, no PG loans provide the capital you need to grow.

• Managing cash flow: Covering day-to-day expenses or bridging gaps between customer payments can keep your business running smoothly.

• Purchasing inventory or equipment: Investing in new inventory or upgrading equipment can boost productivity and competitiveness.

What are the advantages and disadvantages of a no personal guarantee business loan?

Advantages:

• Protects your personal assets

• Provides access to capital for business growth

• Helps manage cash flow effectively

Disadvantages:

• May have higher interest rates or fees compared to secured loans

• Eligibility criteria may not be suitable for all businesses

Does my business credit score matter with a no personal guarantee business loan?

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.