How to borrow without a personal guarantee

What a personal guarantee actually does

A personal guarantee (PG) is a promise by a director — given personally, outside the company — to repay the company's debt if the business can't. It pierces the protection that incorporating was meant to give you: with a PG in place, the lender can pursue your personal assets, including your home and savings, if the company defaults.

Lenders ask for PGs to reduce their own risk, particularly with younger or thinly-traded companies. But a guarantee shifts that risk squarely onto you personally — which is exactly what limited liability is supposed to prevent. Understanding that trade-off is the starting point for avoiding one.

What makes company-only lending possible

Lending without a PG works when the lender can take enough comfort from the company itself — its trading, cash flow and creditworthiness — that it doesn't need to fall back on the director's assets. That's a function of both the business and the lender's model.

Some lenders are built around assessing the company as a standalone borrower; others default to a PG on almost everything. The stronger and more legible your company's finances, the more lenders will consider lending on the business alone. The goal is to make the company a credible borrower in its own right, so a guarantee becomes unnecessary rather than merely waived.

Strengthen the company's standing

The work that makes PG-free lending realistic is the same work that makes any application stronger:

• Build a clean trading record — steady, healthy turnover through the business bank account.
• Keep filings current — accounts and confirmation statements on time, ideally fuller rather than abbreviated.
• Develop the company's own credit profile, separate from yours — see improving your business credit score.
• Manage gearing sensibly — don't run every facility to the limit.
• Hold positive net assets on the balance sheet where you can.

Each of these gives a lender more reason to rely on the company and less reason to reach for your personal assets. A business that can stand on its own figures is one that can borrow on them.

Choose a lender that doesn't require a PG

The most direct route is simply to borrow from a lender whose model doesn't require a guarantee in the first place. This is where Credicorp differs from much of the market: Credicorp lends to the limited company, not the director personally, and takes no personal guarantee. The assessment centres on the company's trading and cash flow, so your home and personal savings aren't tied to the facility.

When comparing offers, read the terms carefully — a low headline rate paired with a full PG can be a worse deal than a slightly higher rate with none, because the PG is a real, if hidden, cost. Always ask the question directly: is a personal guarantee required? Many lenders require one as standard and won't volunteer it until late in the process.

Weigh it up honestly

Avoiding a PG is about protecting your personal position, not avoiding responsibility. Borrow only what the company can genuinely afford from its trading, regardless of whether a guarantee is involved — that affordability is what keeps the business, and you, safe.

If you're early-stage and a lender insists on a PG you're not comfortable with, the better move is often to wait, build a few more months of clean trading, and apply where the company's own standing carries the decision — rather than sign away your home to borrow sooner. For the full pre-application picture, see preparing for a finance application. When you're ready to apply on the company's strength alone, you can start at clients.credicorp.co.uk/register.