Growth Guarantee Scheme personal guarantees

What lenders can and cannot ask for

Lenders are allowed to take personal guarantees for facilities of all sizes, if taking a personal guarantee is part of their typical lending practice. Lenders cannot take your principal private residence as security.

Whether a lender asks for one depends on the lender and your proposal, so ask early.

A worked example from the British Business Bank

A business borrows a £1 million facility with a £100,000 personal guarantee. It pays off £400,000 and then defaults, owing £600,000. The lender recovers £100,000 from other secured business assets such as stock, leaving £500,000 outstanding. The call on the personal guarantee is £100,000, leaving £400,000 as an initial loss to the lender.

The lender can claim 70% of that loss (£280,000) under the government guarantee, leaving £120,000 as the final loss to the lender. The guarantee works for the lender's loss. Your business remains 100% liable for the debt.

Two different guarantees

A personal guarantee is given by you, and it supports the lender if the business cannot pay. The government's 70% guarantee is given to the lender by the scheme. Neither reduces the amount your business must repay.

See borrowing limits and terms.

Test whether the repayments fit your cash flow with the GGS loan affordability calculator.