Judges Demand

Do you provide credit to Limited Companies? Are you concerned they won’t pay?

Published On: 5th November 2018

In simple terms, a Personal Guarantee is a Guarantee under which an individual agrees to be responsible for the financial obligations of a borrower or debtor to a lender, in the event that the borrower or debtor fails to pay an amount owing to the Lender.

If you provide credit to a Limited Company but they are unable to pay their debts as and when they fall due, if a Personal Guarantee is in place this means a Director of a Company takes the responsibility for the Company debts in the event that they cannot be paid by the company itself.

Companies in any sector may consider a Personal Guarantee, providing it means they can access credit or business overdraft facilities or take on debts they are confident they can repay.

A personal guarantee makes a credit or loan deal more secure because responsibility for paying it back is the responsibility of the company and also the director.

If you are concerned about offering a business credit or loan, for example they may have a small credit limit or County Court Judgments, then a personal guarantee can be a way forward.