2 min read
Definition
A guarantee is a secondary obligation — you're liable only if the primary borrower defaults. An indemnity is a primary obligation to compensate for a loss, standing on its own even if the underlying debt is unenforceable. Many personal guarantees include an indemnity to close that gap.
In plain terms
A guarantee is 'I'll pay if they don't'; an indemnity is 'I'll cover the loss whatever happens'. The indemnity is harder to escape.
Why it matters for your company
Directors asked to sign should know which they're taking on — an indemnity is broader. Better still, borrow where neither is needed: Credicorp takes no personal guarantee. See how to avoid personal guarantees.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.