Need to Sign a Director’s Personal Guarantee?

What Is a Director’s Personal Guarantee?

A director’s personal guarantee is a legal commitment that makes you personally liable for repaying a business loan if your company cannot. It effectively overrides the protection of limited liability.

What this means for you:

• If the company defaults, the lender can demand repayment from you personally

• Your home, savings, and investments may be at risk

• You may be pursued even after resigning as a director

• The lender can take enforcement action without going through the company

💡  Lawyer Tip: Many directors don’t realise their guarantee includes “joint and several” liability. That means even if you’re one of multiple directors, the lender can pursue you alone for the full debt.

Why Is Independent Legal Advice Required?

Most lenders require you to get ILA before accepting your personal guarantee. This protects both you and the lender by ensuring:

• You understand what you’re signing

• You are entering the agreement voluntarily

• There’s no undue influence, misinformation, or pressure

Without this, the lender could face claims that the guarantee is unenforceable.

📘 Case Law: RBS v Etridge (No 2) [2001] UKHL 44
This leading case confirmed that lenders must take steps to ensure individuals signing personal guarantees receive independent legal advice. If they don’t, the guarantee could be set aside.

What Happens If You Sign Without ILA?

Signing without proper advice can result in:

• The lender refusing to release funds

• You accepting unlimited, ongoing liability without knowing

• No legal protection if you were misled or pressured

• Difficulty challenging the agreement in future

Our Strategic Guarantee Advice Service

We don’t just provide a certificate — we deliver clear, protective legal advice from experienced solicitors who specialise in finance-related ILA.

Here’s how we help:

✔️ Highlight hidden risks (e.g. enforcement clauses, post-resignation liability)
✔️ Explain the legal consequences of the guarantee
✔️ Answer your questions and give you practical options
✔️ Certify your advice for the lender
✔️ Issue your certificate the same day, in most cases

⚠️ Lawyer Insight: We frequently see “unlimited” or “irrevocable” guarantees with no expiry clause. If these aren’t spotted and understood, you could be liable for years, even after leaving the company.

Case Study: Limiting Liability on a £450,000 Guarantee

Client: Rina, co-founder of a growing logistics company in Leeds
Scenario: Her lender required a personal guarantee as part of a £450k expansion loan.

Risks identified by Fast ILA:

1. Liability extended beyond her directorship
2. No clear limit on the amount guaranteed
3. Clauses allowing immediate enforcement on default

What we did:

1. Flagged risks during our ILA session
2. Helped Rina renegotiate the terms with the lender
3. Liability was capped at £150,000 with a 2-year limit

Outcome: Rina protected her assets, satisfied the lender, and signed confidently in one same-day video call.

Who Needs This Service?

We advise directors in a wide range of circumstances, including:

• Signing bank loan guarantees

• Acting as guarantor for bridging loans or invoice finance

• Entering into group company cross-guarantees

• Providing security for asset leasing, overdrafts, or investor loans

• Co-directors needing separate advice sessions

We also act for overseas directors who are signing UK-law-governed guarantees.

What You’ll Need to Provide

To ensure your appointment is efficient and compliant, we’ll ask you to upload:

1. The personal guarantee document or draft
2. Photo ID (passport or driving licence)
3. Any accompanying loan agreements, term sheets or lender letters
4. Proof of address (if requested by the lender)

All uploads are handled securely via our online FastVerify system.

What to Expect from the Appointment

1. Appointments take 20–30 minutes by secure video call
2. We’ll explain the guarantee in plain English
3. You can ask questions and clarify anything you don’t understand
4. Once complete, we issue your digital ILA certificate the same day (in most cases)

Fixed Fees and Service Options

We offer three flexible ILA options, based on how quickly you need advice or whether multiple parties are involved:

1. Standard ILA – £120 + VAT | 24–48 hour turnaround
2. Urgent ILA – £150 + VAT | Same-day service (often within hours)
3. Partner ILA (for two people) – £220 + VAT | Includes two back-to-back advice sessions

🔒 All appointments are conducted remotely and confidentially via video. No in-person attendance required.