Cashflow Loans: Do They Require a Personal Guarantee?

Short answer: Sometimes. Whether a cashflow loan introduced through UK Business Loans requires a personal guarantee depends on the lender, loan amount (we arrange loans from £10,000 and up), the type of facility, the company’s trading history and the directors’ credit. Read on for practical scenarios, examples and clear next steps so you can quickly find lenders who match your needs.

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Table of contents

• What is a personal guarantee?
• When do cashflow loans usually require a personal guarantee?
• Cashflow loan types and how PGs apply
• How UK Business Loans helps you find lenders less likely to require PGs
• How to reduce the chance you’ll be asked for a personal guarantee
• Questions to ask lenders or brokers (before signing)
• Real examples / quick case studies
• Frequently asked questions (FAQ)
• Next steps — get a no-obligation quote
• Legal, privacy and disclaimers

What is a personal guarantee?

A personal guarantee (PG) is a legal promise by an individual (typically a company director) to pay a lender if the business cannot meet its loan obligations. PGs are offered in different forms:

• Limited guarantee — capped at a set amount or for a defined period.
• Unlimited guarantee — potentially covers all outstanding debt and additional costs to enforcement.
• Joint and several guarantees — each guarantor may be pursued separately for the full amount.

Key point: a PG gives the lender direct recourse to the guarantor’s personal assets if the business defaults. This is general information and not legal advice — always seek independent legal advice before signing any guarantee.

When do cashflow loans usually require a personal guarantee?

Lenders decide whether to ask for a PG based on risk. Common factors they consider include:

• Company age, trading history and turnover
• Loan size and term
• Director(s)’ personal credit history
• Available business security (assets, charges, debentures)
• Type of product (unsecured loan, invoice finance, overdraft, etc.)
• Existing encumbrances or other lending on the business

Practical scenarios:

• Small or recently formed limited companies seeking unsecured cashflow: lenders often request PGs to compensate for limited business history.
• Medium‑to‑larger loans with limited business security: PGs are likely if the lender needs extra protection.
• Invoice finance: many lenders rely on the invoice book as security and may not require a PG for established businesses with strong debtor profiles — but practices vary.

Free Eligibility Check — tell us about your business and we’ll match you to lenders who will indicate whether they typically request personal guarantees.

Cashflow loan types and how PGs apply

Short-term advances, merchant cash advances and short bridging for cashflow

These are higher-risk products for lenders because repayment depends on future sales. Personal guarantees are commonly requested and rates are typically higher.

Unsecured business loans / working capital loans

Many lenders will ask for director guarantees, especially for newer businesses or lower turnover applicants. Some specialist lenders provide unsecured no‑PG options, usually at higher pricing or with strict criteria.

Invoice finance (factoring / discounting)

Invoice finance is usually secured against your debtor ledger. For established businesses with a high-quality book, lenders may waive PGs; for newer companies, a lender can still request a director guarantee.

Overdrafts and revolving facilities

Overdrafts used as ongoing cashflow lines frequently come with PGs for SMEs, particularly where balances are high relative to the business’s size.

Asset‑backed facilities

When the loan is backed by business assets (plant, machinery, property) the need for a PG can be reduced or removed, but not always — some lenders still seek additional personal assurances depending on the risk profile.

How UK Business Loans helps you find lenders less likely to require PGs

UK Business Loans is an introducer: we don’t lend and we don’t decide the terms. Instead we match your enquiry to lenders and brokers who specialise in particular risk profiles and products.

• Tell us a few key facts — loan amount (from £10,000), turnover band and time trading.
• We connect you with lenders who commonly offer the terms you want (for example, lenders that often provide no‑PG invoice finance or lenders that routinely require PGs).
• Lenders or brokers will contact you directly to confirm eligibility and whether a PG is likely on any conditional offer.

Get Started — Free Eligibility Check

How to reduce the chance you’ll be asked for a personal guarantee

While final decisions are the lender’s, the following practical steps improve your chance of no‑PG offers:

• Improve company and personal credit scores before applying.
• Prepare up‑to‑date management accounts, cashflow forecasts and aged debtors reports.
• Offer business assets as security (asset finance or fixed charge) so lenders have other recourse.
• Lower the loan amount requested or provide a larger deposit.
• Use a specialist broker (we’ll introduce them) who knows which lenders will consider no‑PG arrangements.

Note: no‑PG facilities often carry higher interest rates or fees — lenders price the increased risk into the product.

Questions to ask lenders or brokers (before signing)

Get the following in writing where possible:

• Will a personal guarantee be required? If so, is it limited or unlimited?
• What is the exact wording and scope of the PG? Does it include personal property, future liabilities or third‑party guarantees?
• Is the PG joint and several (can the lender pursue any guarantor for the full balance)?
• Is there a cap on the PG amount or an exit mechanism (e.g., removal after X months of on‑time payments)?
• What security is taken against the company and what is the order of recourse on default?
• Will the lender carry out a credit search on directors and how will that be recorded?

Get Quote Now — have potential lenders answer these questions for your specific case before you commit.

Real examples / quick case studies

Example 1 — Established manufacturing SME

A well‑established manufacturing company with consistent turnover applied for £150,000 working capital. The lender required a limited director personal guarantee capped at £75,000 alongside a fixed charge on specific equipment. The cap and charge limited the director’s exposure compared with an unlimited PG.

Example 2 — Invoice finance for an experienced services firm

A services business with a strong aged debtor ledger secured an invoice finance facility without a personal guarantee because the lender’s advance rate and control environment gave sufficient security. The lender’s decision followed a credit review of the debtor book rather than reliance on director guarantees.

Outcomes vary by lender. To see which outcome is most likely for your business, use our matching service.

Frequently asked questions (FAQ)

Do cashflow loans always require a personal guarantee?

No. It depends on the lender, the loan type, size and the security available. Some lenders routinely require guarantees; others don’t if the facility is secured by assets or invoices and the business meets strict criteria.

Can I refuse to sign a personal guarantee?

Yes, you can refuse. The lender may decline the application or offer different terms. A broker can help you target lenders that don’t require PGs.

Are personal guarantees unlimited?

Not always. Guarantees can be limited (capped amount or timeframe) or unlimited. Always check the exact terms in the guarantee wording.

Will a personal guarantee affect my personal credit score?

Signing a PG alone may not show as a negative event immediately, but lenders often perform credit checks before agreeing terms. Enforcement following default can significantly harm personal credit.

Can a personal guarantee be removed later?

Sometimes — lenders may agree to release a PG after certain conditions are met (e.g., strong trading for a period, refinance). Always negotiate and get removal conditions in writing.

Should I get legal advice before signing a PG?

Yes. A PG is a serious legal commitment. Independent legal advice helps you understand the scope and potential personal consequences.

Next steps — Get a no‑obligation quote

Ready to find out whether your cashflow loan will require a personal guarantee? Complete our short enquiry (it takes around 2 minutes). We’ll match your business to lenders and brokers most likely to offer the terms you need — and they’ll contact you with quotes.

Start your Free Eligibility Check — Get Quote Now

Typical response time: usually within a few hours during business days.

Legal, privacy and disclaimers

UK Business Loans introduces businesses to lenders and brokers; we do not provide loans or regulated financial advice. Any offer, term or requirement for a personal guarantee is decided by the lender or broker you are introduced to. Always read documents carefully and take independent legal advice before signing guarantees.

We arrange facilities from £10,000 and up. For information on how we handle your data, please see our privacy policy and terms & conditions.

Related: If you want to read more about the features of working capital and cashflow lending, see our cashflow loans guide on the cashflow loans page.

1. Do cashflow loans introduced via UK Business Loans require a personal guarantee?
Sometimes — it depends on the lender, loan size, facility type, company age and director credit, and our free eligibility check will match you to lenders who indicate their likely PG policy.

2. Can I get a cashflow or working capital loan without a personal guarantee?
Yes — some lenders and specialist products (for example invoice finance or asset‑backed facilities) offer no‑PG options, though availability and pricing depend on your business profile.

3. Will submitting an enquiry on UK Business Loans affect my personal or business credit score?
No — our enquiry form is not a formal application and won’t impact your credit score; lenders or brokers may carry out credit checks only later if you proceed.

4. What loan amounts can your network arrange?
Our partners arrange business finance from around £10,000 up to multi‑million facilities depending on the product and lender.

5. How quickly will I get responses after completing the free eligibility check?
Typically you’ll hear from matched lenders or brokers within a few hours on business days, although response times can vary by partner.

6. Are the lenders and brokers you introduce FCA‑regulated and reputable?
Yes — we only work with experienced, UK‑based lenders and FCA‑regulated brokers who follow consumer protection rules.

7. What documents do lenders usually ask for when assessing a cashflow loan?
Common requirements include company details, recent management accounts, bank statements, aged debtor reports (for invoice finance) and director ID, though exact docs vary by lender.

8. Can start‑ups or businesses with bad credit get cashflow finance through your service?
Yes — some specialist lenders in our network consider early‑stage businesses and imperfect credit histories, often with specific terms, security or higher pricing.

9. Can a personal guarantee be limited or removed after the loan is agreed?
Often — guarantees can be capped, time‑limited or released after meeting agreed trading or refinance conditions, but you should secure any removal terms in writing and take legal advice.

10. Is using UK Business Loans free and does the enquiry commit me to an application?
Yes — our service is free and no‑obligation: the enquiry simply helps us match your business to suitable lenders and brokers who then contact you with options.