UK personal guarantees on business loans, explained
What a PG actually does, when it is enforceable, what limited or non-recourse PGs mean, and which lenders waive them.
Director, BestBusinessLoans
Oliver leads BestBusinessLoans's editorial reviews and methodology. With a background in UK commercial finance, he oversees lender research, rate verification and review independence.
Last reviewed: 26 April 2026
What a PG is
A separate contract between the director (the guarantor) and the lender. The director undertakes to pay any amount the company cannot. The PG is independent of the company's liability, the lender can call on the PG without exhausting company assets first, depending on the contract wording.
Limited vs unlimited PG
Limited PGs cap the director's exposure at a stated figure (often the original loan amount or a percentage of it). Unlimited PGs cap nothing, the director is liable for the whole debt plus default interest, fees and enforcement costs. Insist on a limited PG where possible.
Joint and several PGs
When multiple directors guarantee, "joint and several" means each director can be pursued for the full amount, not just their share. The lender chooses who to chase. Insist on "several only" where possible.
When a PG is enforceable
After a default, demand and notice, in line with the contract. The lender does not have to wait until the company is wound up. PGs are subject to consumer-protection rules in some cases (PG-Backstop where the guarantor is a "small business consumer"). FCA rules on consumer guarantees apply where the underlying credit is regulated.
PG insurance
PG insurance pays the lender if you default on the PG, in exchange for a premium. Useful for high-value PGs but expensive. Read the policy carefully, most exclude voluntary winding-up and major underwriting events.
Lenders that waive PGs
365 Business Finance offers no-PG MCA in some cases. Allica Bank does not require PG against asset-backed commercial real estate lending. OakNorth structures bespoke deals without PG against strong asset security. Outside these specific cases, most UK SMB lenders require a PG.
FAQ
Can my spouse refuse to consent to my PG?
A spouse cannot block the PG itself but may need to consent to a charge over the family home if that becomes the PG security. UK courts have set aside PGs in cases of "undue influence" but the bar is high.
What happens if I retire as director after signing the PG?
The PG stays in force. Resignation does not release the guarantor. Some PGs have a "release on resignation" clause; check before signing.
Reviewed by Oliver Mackman, Director. Last reviewed: 2026-04-26.