Business Funding · 6 min read
Personal guarantees on business funding: what you sign
A personal guarantee is a director's promise to repay business funding personally if the company cannot. iwoca's unsecured business loans page describes it as “a commitment to take personal responsibility for the loan if the business can't repay it”. It is standard on unsecured lending to small companies: Funding Circle states one will be required on an approved loan, and iwoca asks for one from a company director. Signing it means the limited-liability line between the company and the director no longer applies to that debt.
Why lenders ask for one
A limited company exists partly to keep business debts away from the people who run it. A lender advancing money to a company with little on its balance sheet is, in practice, lending against the directors' commitment, and the guarantee is what makes that commitment enforceable. That is why it appears on products that describe themselves as unsecured. Unsecured means there is no charge over a particular asset such as property or equipment. It does not mean the director is not on the hook. Rangewell notes that personal guarantees are still required on unsecured loans, including where a CCJ is in the picture.
What the published positions are
| Provider | Product | Published position on a guarantee |
|---|---|---|
| Funding Circle | Business loan | “A personal guarantee will be required” if approved |
| iwoca | Business loan | Asks for a guarantee from a company director for limited companies |
| YouLend | Merchant cash advance | Does not publish a position either way (Business Expert) |
| Capify | Merchant cash advance | Requirement not published (Business Expert) |
Checked August 2026. Where a provider does not publish its position, the only reliable answer is the one it gives in writing for a specific application.
Joint and several
Where more than one director signs, the guarantee is commonly joint and several. In general terms, that means the lender can pursue any one of the signers for the full amount, not just that person's share. If one director cannot pay, the other may carry the whole liability, and recovering a share from the co-director is then a separate matter between them. A several guarantee, by contrast, generally caps each signer at a stated portion. Which form is in the document is one of the first things worth checking, and one of the points directors commonly ask to change before signing.
Limited, unlimited and all monies
In general terms, three other clauses shape how much the promise is worth. A limited guarantee caps liability at a fixed sum or a percentage of the facility; an unlimited one covers the full outstanding balance plus the lender's costs, with no ceiling. An “all monies” clause typically extends the guarantee beyond this facility to other borrowing from the same lender. These are general descriptions rather than legal definitions; the document itself decides what applies. Whether the guarantee steps down as the debt is repaid, and how it is released at the end, is set by the wording rather than by custom. We go through each of these on our personal guarantee explained page.
What happens if it is called
If the company fails to repay, the lender writes to the director demanding payment under the guarantee. iwoca states that signing a personal guarantee alone does not affect your credit score; it is enforcement that gets recorded. Any county court judgment or default that follows is recorded against the person, and Funding Options notes a CCJ can appear on a credit record for six years. How a given lender defines default and what it can recover is set out in the facility agreement, and the terms of the major providers are generally not public, so the signed document is the only version that counts. There is more on the credit file side in our article on business loans and personal credit.
Independent legal advice
A guarantee is a contract with personal consequences. Lenders commonly ask for independent legal advice; whether it is required is set by the lender. Even where it is optional, the cost of a solicitor reading the document is small against the size of the commitment. CapExpand does not give legal advice and is not a substitute for it.
When a guarantee is not the right trade
A director who is not willing to stand behind the debt personally, or who cannot survive the guarantee being called, is generally looking at the wrong product. Funding secured on an asset or on receivables leans less on the director's covenant, though not always to zero. Asset finance is secured on the equipment itself and invoice finance lenders look mainly at the customers who owe the invoices. Whether a guarantee is still required on those is a question for each provider. Our questions to ask before an MCA page includes the guarantee question for card-sales products.
CapExpand does not lend and does not set guarantee terms. We introduce UK limited companies and LLPs to funding providers and set out what each offer involves, including any guarantee, before the business decides.
Frequently asked questions
What does a personal guarantee actually mean?
iwoca's unsecured business loans page describes it as "a commitment to take personal responsibility for the loan if the business can't repay it". The limited company borrows; the guarantee means the lender can pursue the director personally if the company does not pay.
Do unsecured business loans need a personal guarantee?
Generally yes. Unsecured means no charge over a specific asset, not no guarantee. Funding Circle states a personal guarantee will be required on an approved loan, iwoca asks for one from a company director, and Rangewell notes guarantees are still required on unsecured loans even where a CCJ is involved.
What does joint and several mean?
In general terms, where two or more directors sign a joint and several guarantee, the lender can pursue any one of them for the whole amount, not just their share. Recovering a share from a co-director is then a matter between the directors. A several guarantee, again in general terms, limits each signer to a stated share. The wording of the document governs, and CapExpand does not give legal advice.
Does a merchant cash advance need a personal guarantee?
It varies and is often not published. Business Expert reports that Capify does not publish its guarantee requirement and that YouLend does not publish a position either way. Businesses commonly ask the provider directly and get the answer in writing before signing.
Do I need a solicitor before signing?
A guarantee is a legal contract with personal consequences. Lenders commonly ask for independent legal advice; whether it is required is set by the lender. Even where it is not required, businesses commonly take it. CapExpand does not give legal advice.
Sources (checked August 2026)
- iwoca: How iwoca loans work and who is eligible (guarantee from a company director)
- iwoca: Unsecured business loans (personal guarantee definition)
- iwoca: Personal guarantees explained (effect on credit score)
- Funding Circle: Small business loans (personal guarantee required)
- Rangewell: Business finance with CCJs (guarantees on unsecured loans)
- Business Expert: YouLend review, 18 August 2026 (guarantee position)
- Business Expert: Capify merchant cash advance review, 18 August 2026 (guarantee requirement)
- Funding Options: Business finance with a CCJ (six years on record)
Know what the last page says before you reach it
CapExpand introduces UK limited companies and LLPs to funding providers and shows, for each offer, whether a guarantee is part of it and what kind. The two-minute form is below; 0333 041 3127 if you would prefer to talk first.
Check your optionsImportant information
CapExpand Ltd is not authorised by the Financial Conduct Authority and can only complete non-regulated introductions. We work with UK limited companies and LLPs only, for business and commercial purposes. We are not a lender and we do not provide financial, tax or legal advice. We work with a panel of lenders whose particulars are available on request, and we receive commission from the lender if a deal completes, at no cost to you. All lending is subject to status, valuation where applicable and the lender's own checks.
Registered office: Pure Offices, Lake View Drive, Annesley, Nottingham, NG15 0DT. Company No. 14433858.
CapExpand Ltd (Company No. 14433858) is a commercial finance introducer, not a lender. We are not currently authorised or regulated by the Financial Conduct Authority and do not provide financial advice. All information on this page is for educational purposes only. Funding is subject to status and lender criteria. CapExpand will receive a commission from providers at no extra cost to you.