Equipment finance — do lenders ask for a personal guarantee?

Last updated: 1 November 2025

Hero blurb: Equipment finance can often be secured against the asset itself, but lenders sometimes ask directors for a personal guarantee where risk is higher. Complete a quick form for a free eligibility check and we’ll match you with lenders or brokers who suit your deal. Get Quote Now — Free Eligibility Check

Important: UK Business Loans is an introducer — not a lender or regulated adviser. We pass enquiries to lenders and brokers who may contact you. Our service is free and no obligation.

Table of contents

• TL;DR — short answer
• How equipment finance works in the UK
• Do UK Business Loans’ partners ask for personal guarantees?
• Factors lenders consider when asking for a personal guarantee
• Equipment finance types — PG likelihood by product
• Personal guarantee — common forms and legal implications
• Options to reduce or avoid personal guarantees
• Practical steps before you apply
• How UK Business Loans helps
• Frequently asked questions (FAQ)
• Ready to compare quotes?

TL;DR — short answer for busy owners

Short answer: sometimes. Many equipment finance deals rely primarily on the equipment as security and don’t require a director personal guarantee (PG). However, if the lender perceives higher risk — for example weak trading history, low deposit, or small equity — a personal guarantee may be requested.

Get Your Free Quote — we’ll match your enquiry to lenders and brokers who commonly structure non-PG and PG deals.

How equipment finance works in the UK

Equipment finance lets a business acquire capital goods — machinery, vehicles, catering or medical kit — without paying the full purchase price upfront. Several common structures are used:

• Hire Purchase (HP) — you pay fixed instalments and ownership transfers after the final payment.
• Finance lease — lender retains ownership; you lease the asset and usually have an option to buy.
• Operating lease — for shorter-term use; the lessor retains risk and ownership.
• Chattel mortgage — the business owns the asset but the lender takes a charge over it until repaid.

Security is typically the asset itself. Lenders use:

• Retention of title or a fixed charge over the specific equipment;
• Motor/asset registers and UCC-style filings to protect their interest;
• In some cases, a floating charge over company assets or broader corporate security.

Do UK Business Loans’ partners ask for personal guarantees?

Short direct answer and introducer role

UK Business Loans connects businesses with lenders and brokers — we do not lend. Whether a partner asks for a personal guarantee depends on the lender’s underwriting criteria and the individual deal. Some of our partners regularly provide equipment-only financing without PGs; others require a PG where there is greater perceived risk.

When personal guarantees are most likely

Directors are more likely to be asked for a PG when one or more of these triggers are present:

• Limited or poor company trading history
• Director(s) with adverse personal credit
• Small deposit relative to equipment value
• High loan-to-value (LTV) where the equipment is specialised or depreciates quickly
• Large ticket deals (higher exposure for a single lender)
• Sectors viewed as higher risk by lenders

In other words: if the asset alone doesn’t fully mitigate lender risk, expect a request for additional security — often in the form of a director personal guarantee.

Factors lenders consider when deciding on a personal guarantee

• Company age and trading history: Longer trading history reduces the likelihood of a PG.
• Annual turnover and profitability: Strong cashflow lowers perceived risk.
• Director credit profile: Defaults, CCJs or insolvency events increase PG likelihood.
• Size of the deal: Bigger facilities attract stricter security demands.
• Asset value vs loan amount: If the equipment covers most of the loan, lenders are less likely to require PGs.
• Existing secured debt: More pre-existing charges make new lenders cautious.
• Sector risk and resale value: Highly specialised assets with low secondary market value increase PG chances.

Equipment finance types — how likely is a personal guarantee for each?

Below is a quick guide on PG likelihood by product (Low/Medium/High) and why.

Hire Purchase (HP)

Typical security: asset retained by lender until final payment.

PG likelihood: Medium.

Why: The asset is strong security, but lenders may still ask for a PG if the borrower’s credit or company history is weak or the deposit is low.

Finance lease

Typical security: lender keeps ownership; lessee pays rentals.

PG likelihood: Medium.

Why: Lenders rely on the lease contract and asset but may seek PGs for higher-value or higher-risk deals.

Operating lease

Typical security: lessor retains ownership, often used for short terms.

PG likelihood: Low–Medium.

Why: Lessors often prefer corporate creditworthiness; PGs are less common but possible for smaller businesses or long-term commitments.

Chattel mortgage

Typical security: company owns asset; lender holds a mortgage over it.

PG likelihood: Medium–High.

Why: Because the borrower technically owns the asset, lenders may require extra security against resale risk.

Vendor finance

Typical security: a mix of asset and supplier guarantee.

PG likelihood: Low–Medium.

Why: Supplier relationships and warranties can reduce the need for director PGs, but not always.

Asset refinance / refinance against equipment

Typical security: existing asset value pledged.

PG likelihood: Medium–High.

Why: Lenders will examine original funding and overall company indebtedness; PGs are more likely where covenants or priority of charges exist.

Personal guarantee — common forms and legal implications

• Unlimited guarantee — the director accepts full liability for the company’s obligations. Enforcement can put personal assets at risk.
• Limited/capped guarantee — liability is limited to a specific amount or period.
• Secondary or “top-up” guarantee — only called on after the company’s assets are realised.
• Cross-guarantee — directors or group companies guarantee each other’s borrowings.

Legal implications:

• PGs are legally binding and enforceable in court.
• Default and enforcement can affect personal credit and assets.
• Directors should seek independent legal advice before signing a guarantee.

Options to reduce or avoid personal guarantees

If you want to limit or avoid PGs, consider the following strategies:

• Larger deposit: lower LTVs reduce lender risk.
• Offer corporate-only security: fixed charge over the equipment or company assets rather than director guarantees.
• Higher price (rate) or shorter term: accept a higher cost in exchange for no PG.
• Third-party guarantor: a business partner or parent company may provide security instead.
• Invoice or asset finance: alternative products that sometimes do not require PGs.
• Seek specialist non-PG lenders: some funders specifically offer non-PG equipment deals, often at different pricing.

Experienced brokers can often negotiate caps, sunset clauses or partial guarantees. If avoiding PGs is important, tell your broker early — it helps them target the right lenders.

See lenders who may consider non-PG deals

Practical steps before you apply (preparation checklist)

Get these ready to improve offers and reduce the chance of a PG being required:

1. Recent management accounts and cashflow forecasts (12 months).
2. Company incorporation documents and articles.
3. Director ID and recent personal credit check consent.
4. Equipment quote, specification, age (if used), and valuation.
5. Details of existing secured loans and charges.
6. A short business plan or explanation of how the asset will drive revenue.

Well-prepared submissions make it easier for brokers and lenders to place your case with funders who accept equipment-only security.

How UK Business Loans helps — free eligibility check & matching

UK Business Loans is an introducer — we do not lend or provide regulated financial advice. Complete our short enquiry and we’ll match your business with lenders and brokers suited to equipment deals from roughly £10,000 upwards. There’s no obligation and no fee for the introduction.

• Fast matching to lenders/brokers who understand your sector.
• We can flag to partners that you prefer a non-PG option.
• Typical response times: often within hours on business days.

Get Started — Free Eligibility Check

Frequently asked questions (FAQ)

Will signing a personal guarantee put my home at risk?

If the guarantee is unlimited and is enforced it could. Guarantees can be limited or tied to specific amounts — always get legal advice before signing.

Can a personal guarantee be limited or time-bound?

Yes. Many lenders will accept capped guarantees, sunset clauses or guarantees limited to a specific period or value — especially when negotiated by an experienced broker.

Will a personal guarantee show on my credit file?

A guarantee itself is a contractual document and does not automatically create a credit record, but defaults and enforcement can affect your personal credit score.

If my company folds, will I be personally liable?

Potentially yes — if you signed a personal guarantee, lenders may pursue you personally for outstanding amounts after company insolvency. That’s why legal advice is essential.

How do I get lenders to waive a PG?

Improve company accounts, increase deposit, offer alternative corporate security, or use a specialist non-PG lender. Using a broker to present a strong case increases your chances.

Personal guarantees are legally binding. You should seek independent legal advice before signing any guarantee.

Ready to compare equipment finance quotes?

Complete our quick enquiry (it takes about 2 minutes). We’ll match you to lenders and brokers who can offer tailored equipment finance solutions and explain whether a personal guarantee is likely for your case. Start Your Enquiry — Free Eligibility Check

Note: If you want to read more about the product types and examples of equipment finance, see our equipment finance page — equipment finance.

Author: UK Business Loans — SME finance specialists; we match businesses with lenders and brokers to find the best funding options. We do not lend or provide regulated financial advice.

1. Do lenders ask for a personal guarantee on equipment finance? — Sometimes; many lenders rely on the equipment as security but may request a director personal guarantee where perceived risk is higher (weak trading history, low deposit or poor credit).

2. How can I avoid giving a personal guarantee for equipment finance? — You can often reduce PG chances by offering a larger deposit, corporate-only security, a third‑party guarantor, using specialist non‑PG funders, or choosing higher cost/shorter term options.

3. Will signing a personal guarantee put my home at risk? — If the guarantee is unlimited and enforcement occurs, personal assets including your home could be at risk, so obtain independent legal advice before signing.

4. Can a personal guarantee be limited or time‑bound? — Yes — many lenders accept capped, sunset or time‑limited guarantees and experienced brokers can often negotiate these terms.

5. Will submitting an enquiry to UK Business Loans affect my credit score? — No — completing our free eligibility check is not a loan application and does not affect your credit score, although partners may carry out checks later if you proceed.

6. What documents should I prepare for an equipment finance enquiry? — Typical documents include recent management accounts and cashflow forecasts, company incorporation papers, director ID and consent, equipment quotes/valuations and details of existing secured debts.

7. Which types of equipment finance are least likely to require a personal guarantee? — Operating leases and some vendor finance deals are generally less likely to need a PG, while chattel mortgages and asset refinances often carry a higher PG likelihood.

8. Can businesses with poor credit or limited trading history get equipment finance without a PG? — Possibly — specialist lenders or higher-deposit/asset-backed structures can help, but the lender’s risk appetite and your business profile determine the outcome.

9. How quickly will lenders or brokers contact me after I request a free eligibility check? — Typically you can expect a response within hours on business days once your enquiry is matched to suitable partners.

10. What’s the difference between the enquiry form and a formal loan application? — The enquiry form simply lets UK Business Loans match you to appropriate lenders and brokers (it’s free, not an application, and carries no obligation).