Restaurant business loans: do lenders typically ask for a personal guarantee?

Quick answer: Often — but not always. Whether a lender asks for a personal guarantee (PG) on a restaurant loan depends on the lender type, loan size, the business’s trading history and the security available. If you want to see which lenders are likely to ask for a PG for your situation, Get a Free Eligibility Check and we’ll match you to suitable lenders and brokers. Get a Free Eligibility Check

We are an introducer. UK Business Loans does not provide loans or regulated financial advice — we introduce businesses to lenders and brokers. Any finance offer is subject to the lender’s eligibility checks.

What is a personal guarantee (PG)?

A personal guarantee is a written promise by an owner or director to be personally responsible for repaying a business loan if the company cannot. In effect, the guarantor accepts that the lender can pursue their personal assets (after following the agreed legal process) to recover any unpaid debt.

Common PG types:

• Unlimited PG — the guarantor’s full personal liability for the debt (no fixed cap).
• Capped PG — the guarantor’s liability is limited to a specified amount.
• Time-limited PG (sunset clause) — liability ends after a fixed period or once certain conditions (e.g. successive on-time payments) are met.
• Joint & several PGs — multiple guarantors are each fully liable until the debt is repaid.

PGs are used across loan types: term business loans, commercial mortgages, asset finance, bridging facilities and sometimes invoice finance. Example: a chef-owner signs a capped PG when taking a £80,000 fit-out loan to secure favourable pricing — the lender has both a charge on equipment and the director’s guarantee as backup.

Do lenders matched by UK Business Loans usually ask for PGs on restaurant loans?

Short answer: it varies. We work with a wide panel of lenders and brokers — some commonly require director guarantees, some avoid PGs but use other protections. Here’s how it breaks down by lender type:

• High-street banks: more likely to request PGs for smaller limited companies, start-ups, higher-risk locations or where security is limited. For commercial mortgages banks commonly seek director guarantees alongside property charges.
• Specialist restaurant lenders and regional banks: may be more flexible if you have strong sector financials, multiple sites or proven management. They may accept a capped PG or time-limited guarantee.
• Alternative & merchant lenders: some will offer unsecured or non-PG loans, but expect higher interest rates or fees. Others use higher facility costs rather than PGs.
• Asset/equipment finance providers: typically secure against the equipment itself; PGs are sometimes required for newer businesses or smaller operators.
• Merchant cash advance / revenue-based finance: PGs are less common, but these products are often the most expensive option.

Key factors that increase PG likelihood include loan amount, short trading history, poor personal/business credit, limited tangible security and the hospitality sector’s risk profile. If you want to know which lenders are more likely to accept your preferred structure, Get Quote Now — free, no-obligation.

Why restaurants often face PG requests (restaurant-specific factors)

Restaurants frequently attract PG requests because the hospitality sector carries distinct risks:

• Seasonal trading and variable cash flow.
• Thin operating margins and high fixed costs (rent, wages, utilities).
• High upfront costs — fit-outs, catering equipment, kitchen installations and lease deposits.
• High business churn in hospitality and location-dependant footfall.

Lenders view hospitality as higher risk compared with some other sectors; PGs help them manage downside when company assets alone are insufficient to cover lending exposures. An established multi-site operator with strong financials negotiates much better PG terms than a single-site start-up.

Typical loan types for restaurants and relative PG likelihood

Business loans (term loans)

PGs are commonly requested for smaller and medium-term amounts, especially where the company has limited trading history or few assets.

Commercial mortgages

PGs are often required if the borrower is a limited company or when the lender wants extra security beyond the property charge; terms depend on loan-to-value (LTV) and property ownership structure.

Asset & equipment finance

Often secured against the equipment being purchased; PGs may still be requested for higher-risk profiles or where residual values are uncertain.

Merchant cash advance / revenue-based finance

PGs are less common but these facilities come with high effective costs; suitable for urgent short-term cash needs but expensive over time.

Invoice finance

PGs depend on the provider and company credit quality. Smaller operators might be asked for director guarantees as additional security.

Bridging loans & overdrafts

Short-term unsecured credit often attracts PGs unless strong security is in place.

How lenders decide whether to ask for a PG

Lenders underwrite on a range of practical factors:

• Trading history and turnover — the longer and steadier the trading, the less likely a full unlimited PG is needed.
• Profitability and cashflow forecasts — robust forecasts reduce perceived risk.
• Company structure — limited companies often see PGs; lenders evaluate directors’ track records too.
• Personal and business credit scores — adverse records increase PG requests.
• Available security — freehold property, equipment and stock reduce need for personal backing.
• Loan-to-value and amount relative to turnover — larger loans more often require PGs.
• Local market and sector outlook — lenders consider local footfall, competitor landscape and broader hospitality trends.

Underwriter discretion varies between lenders and between lending panels; a good broker relationship and clear documentation can make the difference. If you’d like a tailored assessment, Free Eligibility Check — See if you’ll need to provide a PG.

Alternatives to giving a personal guarantee

If you want to avoid or reduce personal exposure, options include:

• Offering business security instead: commercial property, a second charge on freehold, or a charge on equipment.
• Increasing equity injection or providing a larger deposit so the lender’s risk exposure falls.
• Negotiating a capped PG or time-limited guarantee (sunset clause).
• Using a third-party guarantor (investor or external director) where acceptable to the lender.
• Choosing specialist lenders who may lend without PGs (usually at higher rates) or via asset-backed structures.
• Using invoice finance, leasing or asset finance where the finance is secured on the asset rather than the director.
• Refinancing existing debt to consolidate and negotiate different guarantee terms.

Practical tip: before agreeing to any PG, try to negotiate caps, carve-outs (for your home or certain assets) and a sunset clause — many lenders will compromise when presented with strong business plans and cashflow forecasts.

How to reduce or limit the personal guarantee risk

Steps to protect yourself and your family assets:

• Negotiate the PG: ask for a cap, a time limit, or conditional triggers that reduce exposure over time.
• Provide clear, audited financial statements and realistic forecasting — demonstrate the business can repay without needing to call a PG.
• Reduce the loan amount where possible or increase collateral linked to the business.
• Ask for deed limitations — require the lender to take reasonable steps to pursue company assets first.
• Get independent legal advice — a solicitor experienced in commercial finance can spot risky clauses and suggest protective amendments.

Remember: signing a PG is a legally serious step. Seek professional legal and financial advice before signing.

Real examples & short case studies (anonymised)

Case study A — New neighbourhood café
A single-site start-up needed £60k for kitchen equipment and a fit-out. A bank required an unlimited director’s guarantee. UK Business Loans matched the owner with a specialist asset lender that provided equipment finance secured on the kit and a capped PG — no charge on the owner’s home.

Case study B — Three-site casual dining group
An established operator sought £250k for a refit and expansion. The high-street bank required a PG plus a charge on freehold property. A broker introduced via our network negotiated a capped, time-limited PG (three years with a sunset clause) and better amortisation to protect cashflow.

FAQ — common questions

Do all restaurant loans require a personal guarantee?

No. Requirement depends on loan type, lender and the business profile. Some lenders will accept asset security or higher pricing instead of a PG.

Can I negotiate the guarantee?

Yes. Negotiation points include capping the guarantee, time limits, carve-outs and requiring the lender to pursue business assets first.

Does a PG affect my personal credit score?

Not automatically. But if the business defaults and the lender obtains a judgment against you as guarantor, that can be recorded on personal credit files.

Is a PG the same as a director’s guarantee?

Yes — director’s guarantees are the most common form of PG asked of company directors.

Are there lenders who never take PGs?

Some specialist and alternative lenders may avoid PGs, but they typically price the risk differently (higher rates or stricter covenants).

What should I ask a solicitor before signing?

Ask about the scope of the PG, caps, sunset clauses, carve-outs, and what events could trigger personal enforcement. Also ask how the lender will recover against you in practice.

How quickly can I get quotes via UK Business Loans?

After you submit a short enquiry, lenders and brokers typically respond within hours during business hours. Get Quote Now.

How UK Business Loans helps

Complete a short enquiry form and we’ll match your restaurant to lenders and brokers who specialise in hospitality finance. We handle introductions only — we do not provide loans or regulated financial advice. Submitting an enquiry does not affect your credit score and is free and no-obligation. Start your enquiry.

Note: We commonly arrange funding from around £10,000 upwards. Your details are kept secure and shared only with matched lenders who can help.

Further reading & trusted links

• Financial Conduct Authority
• Business finance support — GOV.UK
• UKHospitality
• For sector-specific finance options, see our restaurants page: restaurants business loans

Privacy & data note: Submitting an enquiry does not affect your credit score. Your details are securely shared with matched lenders and brokers only.

Get a Free Eligibility Check

We are an introducer. UK Business Loans does not provide loans or regulated financial advice; we introduce businesses to lenders and brokers. Any finance offer is subject to the lender’s eligibility checks.

1. Do restaurant business loans usually require a personal guarantee (PG)?
Often — whether a PG is required depends on lender type, loan size, trading history, personal/business credit and available security, so some restaurant loans ask for PGs while others do not.

2. Can I get a restaurant loan without giving a personal guarantee?
Yes — some specialist or alternative lenders and asset-backed finance providers may lend without a PG, though they typically charge higher rates or insist on stronger business security.

3. How can I reduce or cap the risk of a personal guarantee?
You can negotiate a capped or time-limited (sunset) PG, seek carve-outs for certain assets, provide business collateral instead, increase your equity injection and obtain independent legal advice.

4. Which loan types for restaurants are most/least likely to require a PG?
Commercial mortgages and unsecured term loans commonly involve PGs, asset/equipment finance is often secured on the asset (reducing PG need), and merchant cash advances or invoice finance vary by provider.

5. Will submitting an enquiry via UK Business Loans affect my credit score?
No — submitting our short enquiry form is not a loan application and does not affect your personal credit score; lenders may carry out credit checks only if you proceed.

6. How quickly will I get responses or quotes after enquiring?
Typically lenders and brokers matched by UK Business Loans respond within hours during business hours once you submit a short enquiry.

7. What information do I need to complete the enquiry to be matched with lenders?
Provide basic business details, the loan type and amount you need, turnover/trading history and any credit issues so we can match you with relevant lenders and brokers.

8. Are the lenders and brokers UK Business Loans connects me with regulated and trustworthy?
Yes — we introduce you to reputable UK lenders and brokers who operate under FCA guidelines and industry best practice.

9. Can start-ups or businesses with poor credit obtain restaurant funding through your network?
Yes — some lenders in our panel specialise in start-ups and businesses with imperfect credit, although they may require higher pricing, more security or PGs.

10. Is the enquiry form a binding application or obligation to accept funding?
No — the enquiry is a free, no-obligation matching request to help UK Business Loans connect your restaurant with suitable lenders and brokers, not a binding application.