Do lenders call in personal guarantees?
What is a Directors' Personal Guarantee?
Director’s personal guarantees are a measure of security used by lenders to protect themselves when providing business finance. When directors seek funding for their business and sign a ‘personal guarantee’, it is a legally binding waiver that bypasses the limited liability status of a limited company during debt recovery. What this means is that should the business default on the finance terms, the personal guarantee will entitle the lender to recover any amount owing from the directors’ personal estate.
