• Contact us
  • About us
  • Digital edition
  • Online archive
Friday, June 20, 2025
Cumberland and Westmorland Herald
  • News
    MP asks for Government help over plans to replace M6 bridges

    MP asks for Government help over plans to replace M6 bridges

    Resurfacing work to start in Shap – road to be closed for 21 days

    Resurfacing work to start in Shap – road to be closed for 21 days

    Arrests after drugs raid in Penrith

    Arrests after drugs raid in Penrith

    New Kirkby Stephen shop blends retail with purpose

    New Kirkby Stephen shop blends retail with purpose

    New vicar appointed for churches

    New vicar appointed for churches

    Award for Eden writer

    Award for Eden writer

    Penrith man admits possessing cannabis twice with intent to supply

    Penrith man admits possessing cannabis twice with intent to supply

    Risks and strategies for flexible pension drawdown

    Risks and strategies for flexible pension drawdown

    Man arrested after fleeing from police in Penrith

    Man arrested after fleeing from police in Penrith

  • Sport
    Medal success for Upper Eden tug-of-war team

    Medal success for Upper Eden tug-of-war team

    Eden man competes in Hyrox World Games

    Eden man competes in Hyrox World Games

    Double national triumph for Stuart Robinson

    Double national triumph for Stuart Robinson

    Patterdale’s Eden Eagles make history

    Patterdale’s Eden Eagles make history

    Penrith teen crowned British vault champion

    Penrith teen crowned British vault champion

    Penrith gymnasts represent North of England in finals

    Penrith gymnasts represent North of England in finals

    New boss revealed for Penrith AFC

    New boss revealed for Penrith AFC

    Penrith Panthers celebrate winning season

    Penrith Panthers celebrate winning season

    Darren Edmondson leaves Penrith AFC

    Darren Edmondson leaves Penrith AFC

  • Obituaries
  • Nostalgia
  • Online archive
  • Buy Photos
  • Buy your paper
  • North Lakes Living
No Result
View All Result
Cumberland and Westmorland Herald
  • News
    MP asks for Government help over plans to replace M6 bridges

    MP asks for Government help over plans to replace M6 bridges

    Resurfacing work to start in Shap – road to be closed for 21 days

    Resurfacing work to start in Shap – road to be closed for 21 days

    Arrests after drugs raid in Penrith

    Arrests after drugs raid in Penrith

    New Kirkby Stephen shop blends retail with purpose

    New Kirkby Stephen shop blends retail with purpose

    New vicar appointed for churches

    New vicar appointed for churches

    Award for Eden writer

    Award for Eden writer

    Penrith man admits possessing cannabis twice with intent to supply

    Penrith man admits possessing cannabis twice with intent to supply

    Risks and strategies for flexible pension drawdown

    Risks and strategies for flexible pension drawdown

    Man arrested after fleeing from police in Penrith

    Man arrested after fleeing from police in Penrith

  • Sport
    Medal success for Upper Eden tug-of-war team

    Medal success for Upper Eden tug-of-war team

    Eden man competes in Hyrox World Games

    Eden man competes in Hyrox World Games

    Double national triumph for Stuart Robinson

    Double national triumph for Stuart Robinson

    Patterdale’s Eden Eagles make history

    Patterdale’s Eden Eagles make history

    Penrith teen crowned British vault champion

    Penrith teen crowned British vault champion

    Penrith gymnasts represent North of England in finals

    Penrith gymnasts represent North of England in finals

    New boss revealed for Penrith AFC

    New boss revealed for Penrith AFC

    Penrith Panthers celebrate winning season

    Penrith Panthers celebrate winning season

    Darren Edmondson leaves Penrith AFC

    Darren Edmondson leaves Penrith AFC

  • Obituaries
  • Nostalgia
  • Online archive
  • Buy Photos
  • Buy your paper
  • North Lakes Living
No Result
View All Result
Cumberland and Westmorland Herald
No Result
View All Result
Home Expert advice
This article appears as part of a paid partnership with Armstrong Watson

What are the risks for a company director signing a personal guarantee?

By Whitney Whitfield, restructuring and insolvency senior manager, Armstrong Watson

by CWH
24 July 2024
in Expert advice, News
A A
Share on FacebookShare on Twitter
Whitney Whitfield

A limited company has a separate legal entity from its owners. The owner’s personal assets are not usually at risk if the company fails.

At certain points in a company’s life, such as its inception or when it needs additional capital to expand, bank lenders or suppliers will look at the viability of the business when deciding whether to lend or supply goods.

If they consider that there is an unacceptable risk they will look to the shareholders or directors to provide personal guarantees.

What does that mean for the guarantor?

When a personal guarantee is given by a director it means that that person can become personally liable for the company’s debts if the company cannot meet its obligations. It is vital to make the following considerations before signing a personal guarantee to protect their personal assets.

How can a director can protect themselves from personal guarantee risks?

Understand the risks

Many directors sign guarantees without understanding what they are signing or what the implications for themselves are if their company fails.

A full risk analysis of future trading is required, looking at possible outcomes and their effects on the company’s viability.

Are there alternatives?

Rather than taking out credit supported by a personal guarantee, could alternative fund sources be available? It may be worth considering invoice or asset finance, or other secured borrowings.

Be aware of joint and several liability

If several directors give a personal guarantee jointly and severally, any one of them can be pursued by the creditor for the full outstanding balance if the other directors do not have the assets to cover their share.

Negotiate the terms

Negotiate the terms of the guarantee with the lender or other creditor. This could include setting a cap on the guarantee to limit potential financial liability.

It is important to note that a personal guarantee will continue even if a director no longer has a connection with the company.

If a director leaves then they should attempt to release themselves from any personal guarantee at the same time too.

Conflict of interest

Guarantee obligations may create conflicts between personal and company interests, influencing decision-making.

For example if a bank overdraft is personally guaranteed a director may be tempted to treat the bank preferentially, by not paying creditors so as to keep the overdraft to a minimum, to the detriment of the business and its creditors.

Personal Guarantee Insurance

Personal Guarantee Insurance (PGI) is a form of business insurance designed to protect business owners and directors who must provide a personal guarantee to the lender when their company takes out a loan.

In the event of a company failure this insurance will provide a pay out to the director that will cover a portion of the payment needed under the personal guarantee.

This is not a cheap option but may produce a solution in certain circumstances.

Seek legal advice

Probably the most important thing that a director can do is to obtain legal advice before signing a personal guarantee.

This helps to protect directors against the threat of personal liability from the outset, and to understand the risks in more detail.

For more advice and support about company director personal guarantees please call 01768 222030 or email help@armstrongwatson.co.uk

Related Posts

MP asks for Government help over plans to replace M6 bridges
Latest

MP asks for Government help over plans to replace M6 bridges

20 June 2025
Resurfacing work to start in Shap – road to be closed for 21 days
Latest

Resurfacing work to start in Shap – road to be closed for 21 days

20 June 2025
Arrests after drugs raid in Penrith
Latest

Arrests after drugs raid in Penrith

20 June 2025
New Kirkby Stephen shop blends retail with purpose
News

New Kirkby Stephen shop blends retail with purpose

20 June 2025
New vicar appointed for churches
News

New vicar appointed for churches

20 June 2025
Award for Eden writer
News

Award for Eden writer

20 June 2025
No Result
View All Result

Stay connected

Facebook Twitter Instagram

Most popular

New vicar appointed for churches

New vicar appointed for churches

20 June 2025
Resurfacing work to start in Shap – road to be closed for 21 days

Resurfacing work to start in Shap – road to be closed for 21 days

20 June 2025
Award for Eden writer

Award for Eden writer

20 June 2025
Looking back through the archives

Looking back through the archives

20 June 2025
New Kirkby Stephen shop blends retail with purpose

New Kirkby Stephen shop blends retail with purpose

20 June 2025
Arrests after drugs raid in Penrith

Arrests after drugs raid in Penrith

20 June 2025
Cumberland and Westmorland Herald Logo

33 Middlegate
Penrith
Cumbria
CA11 7SY

Phone: 01768 862313
Email: news@cwherald.com

Registered in England as Barrnon Media Limited. No: 12475190
VAT registration number: 343486488

Explore

  • News
  • Sport
  • Farming
  • Property
  • Obituaries
  • Nostalgia
  • Your view

Useful links

  • Contact us
  • Photosales
  • Online archive
  • Buy your paper
  • Digital edition
  • North Lakes Living
  • Advertise
  • About us

Follow us on

© Barrnon Media Limited 2025

Terms & Conditions / Privacy Policy / Cookie Policy

This website and its associated newspaper are members of the Independent Press Standards Organisation
Review Your Cart
0
Discount
Add Coupon Code
Subtotal
Total Installment Payments
Bundle Discount
Checkout

 
0
No Result
View All Result
  • Home
  • News
  • Sport
  • Obituaries
  • Nostalgia
  • Online archive
  • more
    • North Lakes Living
    • Buy Photos
    • Buy your paper
    • About us
    • Contact us

© 2020 Cumberland & Westmorland Herald