Commercial Guarantees & Debentures
Independent Legal Advice for directors and business owners on commercial personal guarantees
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Same-Day Service
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Director Guarantee Specialists
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SRA Regulated
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Fixed Fee from £150 + VAT
✔ Online
Poppy LLB
Solicitor
✔ Online
Zain
Solicitor
✔ Online
Mohsin
Solicitor
How Can We Help You?
Please supply us with:
- The personal guarantee or debenture documentation
- The underlying loan or facility agreement
- Details of the lender's solicitors
- Your preferred appointment time
When banks and commercial lenders extend credit to limited companies, they almost invariably require personal guarantees from the directors and sometimes shareholders. Under the guarantee, the director becomes personally liable for the company's debt — meaning the bank can pursue the director's personal assets, including the family home, if the company defaults.
Lenders increasingly require directors to obtain Independent Legal Advice before signing personal guarantees and debentures. This is partly to comply with the principles in Royal Bank of Scotland v Etridge (No 2) [2001] and partly to ensure the director cannot later challenge the guarantee on grounds of undue influence or misrepresentation. We provide this service quickly, clearly, and at a fixed fee.
Personal Guarantees vs Debentures — What's the Difference?
These two documents are often required together but do different things. A personal guarantee makes the director personally liable for the company's debt. A debenture grants the lender security over the company's assets — typically a fixed and floating charge over everything the company owns.
What You Are Personally Risking
- Your personal assets — including your home — can be pursued for repayment
- Guarantees often continue even after you leave the company
- Most guarantees are "on demand" — payable immediately when called
- Joint and several liability means you can be pursued for the full amount even if there are other guarantors
- Guarantees often include indemnities (broader than guarantees) and cross-default provisions
- Bank can sometimes recover even where the underlying loan would be unenforceable
What We Cover in Your Appointment
1. The Amount and Type of Guarantee
Is the guarantee for a fixed amount, capped, or unlimited? Is it for a specific facility, or "all monies" — which catches every debt the company ever owes to that bank? These distinctions matter enormously.
2. Joint and Several Liability
If multiple directors are guaranteeing the same debt, joint and several liability means the bank can pursue any one of you for the full amount. We will explain how this affects you and your fellow directors.
3. The Debenture
If a debenture is being granted alongside the guarantee, we will explain what assets are being charged, the difference between fixed and floating charges, and how administration or receivership would unfold.
4. Continuation Provisions
Many guarantees continue indefinitely until expressly released — even after you sell your shares or resign as director. We will identify any continuation issues and discuss whether release can be requested.
5. Demand and Enforcement
We will explain what the bank can do if the company defaults — typical timelines, notices, and the routes available to them to enforce against your personal assets.
6. Protective Steps
We will discuss steps you might consider to protect yourself — including ensuring the bank pursues the company first, capping or limiting the guarantee, and Personal Guarantee Insurance (which we do not sell but can explain).
Frequently Asked Questions
Can I refuse to give a personal guarantee?
You can — but the lender will likely refuse to extend the facility. Most commercial lenders to small and medium companies treat director guarantees as standard. The negotiation, if any, is usually around the amount and scope of the guarantee rather than whether to give one at all.
What is the difference between a guarantee and an indemnity?
A guarantee creates secondary liability — you only pay if the primary debtor (the company) does not. An indemnity creates primary liability — you pay regardless. Many bank guarantees are technically both, making them harder to challenge. We will explain the implications for your specific document.
What is an "all monies" guarantee?
An all monies guarantee covers every debt the company owes the bank, present and future. This is much broader than a guarantee for a specific facility. If the company later takes out more borrowing, your guarantee may automatically cover that too — without you knowing.
Can I limit my personal liability?
Sometimes — many lenders will accept a capped guarantee (e.g. limited to £100,000) for smaller facilities. For larger facilities, this becomes much harder. We will discuss the negotiating position with you, though formal negotiation with the lender will need to be conducted by you or your commercial solicitor.
What happens to my guarantee if I sell my shares or leave the company?
Many guarantees continue indefinitely unless expressly released by the lender — meaning you can remain liable for company debts even years after you have left. Always seek formal release in writing when leaving a company, and check that all guarantees are explicitly released as part of the exit.
Is Personal Guarantee Insurance worth it?
PG Insurance is a growing product that covers the director if their company defaults and the guarantee is called. It is not cheap and does not cover every scenario. We do not sell insurance products but can explain how PG insurance works so you can make an informed decision.
Book Your Commercial Guarantee ILA Appointment
Lenders & Companies We Work With
