Quick summary / Key takeaways

• Sometimes required: Many lenders will ask for a personal guarantee on asset finance for smaller businesses, higher loan-to-value (LTV) deals or where corporate security is weak.
• Depends on factors: Business age, turnover, credit profile, asset type and deal size all affect whether a PG is requested.
• Alternatives exist: Higher deposit, capped guarantees, corporate guarantees, or fixed charges over the asset can sometimes replace or limit PGs.
• How UK Business Loans helps: we match you with brokers and lenders experienced in asset finance who can negotiate terms and explain options — complete a short enquiry for a free eligibility check.

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What is an asset finance personal guarantee?

A personal guarantee (PG) is a legally binding promise from one or more directors or owners to meet the company’s finance obligations if the business cannot pay. It is separate from any security over the asset itself (for example, the financed van, machine or plant).

Common forms of guarantee include:

• Unlimited personal guarantee: the guarantor accepts full liability for outstanding debt.
• Capped or limited guarantee: liability is capped to a fixed amount or percentage.
• Joint & several guarantees: where multiple directors sign and each can be pursued for the full amount.

Important: a PG is a personal legal commitment — it can put personal assets at risk and may have tax and insolvency consequences. Always seek independent legal and financial advice before signing.

Do lenders commonly require a personal guarantee for asset finance?

There is no universal rule: lender policies vary widely. Many mainstream asset finance products are secured primarily against the asset, but lenders often look for additional comfort — especially on smaller corporate borrowers or higher-risk assets.

How requirement varies by product

• Hire Purchase / Finance Lease: the asset is security and can often be repossessed, but directors’ PGs are commonly requested for smaller companies or higher LTVs.
• Operating Lease / True lease: larger lessors and those working with established companies may accept corporate-only security, reducing the need for PGs.
• Asset refinance / chattel finance: where the facility extends beyond the asset value, or for specialist equipment with limited resale value, PGs are more likely.

Factors lenders consider

• Company age and trading history
• Turnover, profitability and cashflow
• Existing secured creditors and balance sheet strength
• Type and resale value of the asset (commercial vehicles vs specialist plant)
• Loan size (we typically arrange facilities from £10,000 upward)

Two short examples

Example A: A two-year-old limited company buying a single delivery van for £45,000 — a lender may request a director-level PG because trading history and other company assets are limited.

Example B: An established mid-sized company arranging £500,000 to buy manufacturing plant — large lenders will often accept corporate security only, particularly if the business has strong accounts and other assets.

Where a personal guarantee is most likely (and why)

PGs are most common where lenders see elevated recovery risk. Typical scenarios include:

• Start-ups or recently incorporated companies with limited credit history.
• High LTV deals where the outstanding balance could exceed the asset’s resale value.
• Specialist equipment with narrow secondary markets.
• Businesses with existing secured debt or few unencumbered corporate assets.

The PG shifts some of the credit risk from the lender to the individuals behind the business, increasing the lender’s recovery options if the business fails to repay.

Alternatives to giving a personal guarantee

If you’re uncomfortable with an unlimited PG, there are practical alternatives and negotiation points that professional brokers often secure:

• Higher deposit / lower LTV: reducing the finance amount can remove the lender’s need for personal cover.
• Capped guarantee: limit your liability to a fixed sum.
• Sunset clause / release conditions: arrange for the PG to end after a period of on‑time payments or when the loan balance falls below a threshold.
• Corporate guarantee from a parent company: if available this can replace personal security.
• Fixed charge over the asset or other corporate assets: this provides lender security without personal cover.
• Price / term concessions: sometimes lenders accept higher rates or shorter terms instead of a PG.

Experienced brokers can often present alternative structures to the lender during negotiation.

How brokers and UK Business Loans work when PGs are likely

UK Business Loans connects you with specialised brokers and lenders who understand asset finance. Brokers will typically ask early-stage questions about company accounts, director credit profiles and the asset to determine likely terms and whether a PG will be requested.

Because terms vary by lender and sector, having a broker who knows which lenders accept limited personal cover — or who will offer capped guarantees or sunset clauses — can materially improve your outcome.

For more on the product itself, you may find this overview of asset finance helpful.

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Practical steps if you’re asked for a personal guarantee

If a lender asks you to sign a PG, follow this checklist:

1. Don’t sign immediately: request full written terms including the guarantee wording and when the guarantee may be enforced.
2. Ask for limits: seek a capped guarantee or a sunset clause (automatic release after defined conditions).
3. Negotiate alternatives: propose a larger deposit, reduced LTV or a corporate charge instead.
4. Check joint & several wording: understand whether co-guarantors can be pursued individually for the whole amount.
5. Get independent legal advice: have your solicitor review the guarantee and any charge registration requirements.
6. Confirm tax and insolvency implications: understand how the guarantee might affect personal tax or the handling of personal assets on insolvency.

Note on registration: many corporate charges must be registered at Companies House; check with your adviser whether the lender intends to create a fixed or floating charge.

Frequently asked questions

Are personal guarantees always unlimited?

No. Guarantees can be unlimited, capped to a fixed sum, or limited by time or other release conditions. Always seek to negotiate limits where possible.

Will a guarantee affect my personal credit file?

Guarantors are sometimes referenced on credit checks and a lender may report defaults that result from enforcement. If the business meets its obligations, a guarantee is usually dormant.

Can I be released from a personal guarantee?

Yes — by negotiation. Release is commonly granted after a period of good payment performance, after the outstanding balance falls below a threshold, or when security is improved.

Does UK Business Loans force me to accept a PG?

No. We are an introducer — we do not lend or provide regulated financial advice. We match you with brokers and lenders so you can discuss terms and negotiate. The decision to accept any offer, and its terms, remains yours.

How long does it take to get offers?

Many brokers and lenders review basic enquiries within hours; a firm offer typically takes longer and may require accounts and supporting documentation.

Who usually pays legal costs for guarantees?

Legal costs are often payable by the borrower or guarantor; some lenders will cover limited drafting costs but expect to negotiate who pays during term discussion.

Next steps — get matched to lenders and brokers

If a personal guarantee is a worry, the best first step is to get informed options from specialist brokers who can negotiate on your behalf. Complete a short, no‑obligation enquiry so we can match your case to the most suitable partners.

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Submitting the enquiry is not an application — it simply gives our partners the information they need to provide an accurate response.

Legal & compliance note

Important: UK Business Loans is an introducer — we do not lend or provide regulated financial advice. We match businesses with FCA-regulated lenders and brokers. All finance products carry costs and risks. Personal guarantees can have legal consequences — seek independent legal or financial advice before agreeing to give one.

Our service is free to use and there is no obligation to proceed after receiving quotes. We arrange finance facilities from around £10,000 and upwards.