Quick summary

Short answer: sometimes. Whether a personal guarantee (PG) is required for a solicitors’ business loan in the UK depends on the borrower’s legal structure, trading history, asset cover and the lender’s risk appetite. Lenders more often ask for PGs where the business is new, has limited assets, or the loan is unsecured. PGs are negotiable: they can be capped, time-limited or replaced by other security. Before signing, seek independent legal and tax advice. To explore tailored options and lender matches, start a Free Eligibility Check: Get Quote Now. May affect personal assets and credit if enforced. Providing an enquiry does not affect your credit score. UK Business Loans is an introducer, not a lender.

Why lenders ask for personal guarantees

A personal guarantee gives a lender an additional route to recover money if the business cannot repay. Lenders view guarantees as a way to:

• Reduce credit risk where company assets are limited;
• Ensure directors/partners have “skin in the game”;
• Provide a faster enforcement route than chasing corporate assets alone.

Types of guarantees commonly used:

• Unlimited PG — the guarantor accepts liability for all debt (highest risk).
• Capped/limited PG — liability limited to a set sum or percentage.
• Joint & several — any guarantor may be pursued for the whole debt.
• Several only — liability limited to each guarantor’s share.

Consequences of enforcement can be severe — personal assets may be at risk and guarantor credit records can be affected. Lenders must set out terms clearly; solicitors/firm owners should obtain independent legal advice before signing.

When solicitors’ firms are likely to be asked for a PG

Whether a PG is requested typically depends on the firm’s profile and the lender type:

Firm profile

• New or recently restructured practices — lenders commonly ask for PGs where trading history or accounts are thin.
• Small firms with low net assets — limited company balance sheets with little tangible security usually attract PGs.
• Established, profitable firms — lenders are often able to rely on trading performance and business security, reducing PG demand.

Lender type

• High-street banks — often require PGs for unsecured facilities (overdrafts, unsecured loans).
• Specialist commercial lenders — may be flexible but can still ask for PGs if the deal is higher risk.
• Brokers & alternative lenders — brokers can help identify lenders prepared to lend without PGs to qualifying firms.

If you want lenders and brokers who understand law firm client-money rules and can advise on security that avoids client account interference, start a Free Eligibility Check.

Loan types and how likely a PG is

Below are typical loan types and the usual PG expectation, with brief solicitor-focused examples.

• Commercial mortgage (office premises) — PGs commonly required plus a charge on the property. Example: buying practice premises often involves director guarantees alongside a mortgage on the property.
• Unsecured overdrafts & unsecured business loans — commonly involve PGs, especially for younger firms. Example: an unsecured working-capital loan to bridge fees pending settlement.
• Bridging loans — often require PGs due to short-term, higher-risk profile. Example: short-term funding pending completion of a client-related payment.
• Invoice finance — depends: well-established practices with high-quality debtor ledgers may avoid PGs; younger firms often face PG requests.
• Asset & equipment finance — typically secured on the asset; PG may be unnecessary if the asset value covers the loan.
• Practice acquisition finance — commonly requires PGs and additional security due to higher exposure.

Alternatives to giving a personal guarantee

If you prefer to avoid a PG, lenders may accept other forms of security or mitigations:

• Business asset security (property, plant, equipment) — pros: limits personal exposure; cons: reduces company asset flexibility.
• Fixed charge on commercial property — effective for lenders; cons include a long-term encumbrance on premises.
• Ring-fencing client money and agreed escrow arrangements — must comply with SRA rules; lenders with sector experience can craft acceptable solutions.
• Corporate indemnities or third‑party commercial guarantees — may transfer risk to another entity without involving personal assets.
• Guarantee insurance — sometimes available to protect the guarantor; check policy scope and cost.
• Using a specialist broker — brokers can find lenders who do not require PGs for qualifying practices.

Each alternative has pros and cons; discuss with your accountant and solicitor to weigh business vs personal risk.

Negotiating, limiting and capping personal guarantees

Personal guarantees are often negotiable. Common negotiation points include:

• Caps — limit the guarantor’s liability to a fixed sum.
• Time limits — e.g., release after 12–36 months or after agreed milestones.
• Release triggers — automatic release once company equity reaches a set threshold, or after regular repayments.
• Restriction to current borrowing — guarantee limited to the initial loan balance, excluding future facilities.
• Carve-outs — exclude certain personal assets (family home, pension funds) from enforcement.
• Several liability — prefer several over joint & several to limit exposure to your share.

Practical tips: get proposed guarantee wording early, request written release criteria, and use a broker to negotiate commercial concessions in exchange for a guarantee (lower fees, shorter term, staged security release). Always have a solicitor review the final documents.

Legal, regulatory and professional considerations for solicitors

Solicitors must be especially careful about lender due diligence and client money rules. Key points:

• Refer to SRA and Law Society guidance on client money—lenders must not interfere with client accounts. Check lender understanding of SRA rules.
• Conflict of interest — partners or directors should obtain independent legal advice to avoid conflicts when signing PGs.
• Insolvency risk — enforcement of a PG can lead to personal insolvency or bankruptcy in extreme cases.
• Confidentiality — ensure lender diligence requests are handled without breaching client confidentiality.

Before signing, consult both a solicitor (for guarantee wording) and an accountant (for financial consequences).

Tax and personal credit implications

A PG itself usually does not create an immediate tax liability. However, if enforcement requires sale of personal assets, there can be taxable events (capital gains, etc.). Lenders often carry out credit checks on proposed guarantors — being a guarantor is therefore a factor lenders will consider for personal lending decisions later. If enforcement occurs, it will affect credit records.

Practical due-diligence checklist before signing any PG

• Read the full guarantee wording — don’t rely on summaries.
• Check whether the PG is unlimited or capped; ask for a cap where possible.
• Ask for defined release triggers and time limits.
• Confirm whether it is joint & several or several only.
• Check whether the lender must pursue company assets first.
• Obtain independent legal and tax advice from advisors unconnected with the firm.
• Assess the effect on personal mortgage or other borrowing and get lender consent where relevant.
• Keep copies of all paperwork and any agreed amendments.

How UK Business Loans helps solicitors avoid or limit PGs

We don’t lend — we connect your firm to lenders and brokers experienced with law firms and the SRA’s client-money framework. For loans of approximately £10,000 and above we can:

1. Match your enquiry to lenders/brokers who understand legal practice risks;
2. Identify lenders more likely to accept alternative security or limited PGs;
3. Introduce specialist brokers who can negotiate caps, releases and carve-outs.

Start with a short enquiry — it’s not an application, just details we use to match you: Free Eligibility Check — Get Quote Now. Providing an enquiry does not affect your credit score. For more on sector-specific funding options, see our guide to solicitors business loans.

Frequently asked questions

Do all lenders require a personal guarantee for solicitors?

No. Many lenders will seek a PG where risk is higher or security is limited, but well-established practices with strong security or specialist lenders may lend without PGs.

Can I refuse to give a guarantee?

You can refuse. The lender may decline your application or offer different terms (higher rate, more business security). Negotiation via a broker can often lead to compromise solutions.

Is there personal guarantee insurance?

Yes — some insurers provide policies to cover guarantor liability, but policies vary widely and can be costly. Check scope, exclusions and whether lenders accept such cover.

Will giving a PG affect my personal credit score?

Not immediately, but lenders commonly perform credit checks on prospective guarantors. If the PG is enforced, it can seriously affect credit and personal finances.

Are partners treated differently to directors?

Security and guarantee treatment depends on the legal structure. Partners and directors can both be asked to guarantee; the drafting differs depending on whether the practice is an LLP, limited company or partnership. Get tailored legal advice.

Who pays for legal review of the guarantee?

Typically the guarantor pays their own legal costs to ensure independent advice — this is strongly recommended.

How quickly can I get matched with suitable lenders/brokers?

After you submit a short enquiry we usually match you rapidly — often within hours during business days — and partners contact you with options.

Final summary & next steps

Personal guarantees are a common lender tool but are not inevitable. Much depends on firm size, security available and lender type. PGs can be negotiated, limited or replaced by other security in many cases. Always obtain independent legal and tax advice and consider using a specialist broker to improve your position.

Ready to see which lenders or brokers might offer the best route for your firm? Complete a short, no-obligation enquiry to get matched quickly: Get Started — Free Eligibility Check. Important: UK Business Loans is an introducer and does not provide regulated financial advice. Enquiry doesn’t affect your credit score. Independent legal and accounting advice is strongly recommended before signing any guarantee. May affect your personal assets and credit score.