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Director’s Personal Guarantee

What a director’s personal guarantee really means.

For many limited-company agreements a lender will ask the director for a personal guarantee. Here’s what that actually means, why it’s common, and what to weigh up before signing.

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What a personal guarantee is

A personal guarantee (PG) is the director’s personal promise to cover the agreement if the company can’t. Because a limited company has limited liability, the PG gives the lender recourse to the individual — which is why it unlocks finance for newer or smaller companies.

Why lenders ask for it

  • It offsets a thin or short company history.
  • It aligns the director with the company’s commitment.
  • It’s often what turns a “no” into a “yes” for new companies.

What to weigh up

A PG is a real personal commitment — if the company defaults, you’re liable. Only agree to what you’re comfortable with, keep payments affordable, and consider taking independent advice. This page is information, not advice.

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Frequently asked questions

Do I always need a personal guarantee?
Not always — established companies with strong files may avoid it, but for newer companies it’s common and often necessary.
What happens if the company can’t pay?
The lender can pursue the guarantor personally for the outstanding amount. Keep the finance affordable and seek advice if unsure.

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