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It’s Never ‘Just’ a Personal Guarantee

by Rob Connell / September 10, 2021

What could you be risking to grow your business?

If your business is growing and you’re looking for a working capital finance solution, you may be asked to provide a personal guarantee. It’s like walking on thin ice.

A personal guarantee makes you personally responsible for the debts of the business if the business can’t pay them.

It’s a common requirement and might not be given the consideration it deserves.

Often finance companies advertise ‘no guarantees required’ but still require them for loan amounts of $100,000 or more. We see it for everything from vehicle finance to photocopier leases.  

What are the problems with personal guarantees?

They put your personal assets directly at risk. If your accountant has advised you to establish a Pty Ltd company, a trust or other structures, a big ambition is to minimise your legal risk and the risk to your assets.

Accountants and lawyers recommend these structures, in part, because of the protections they provide to your personal assets. But those protections are eliminated if you sign a personal guarantee.

It’s important to be careful: a personal guarantee can be easily overlooked in standard finance documents.  

What could go wrong?

Personal guarantees say exactly what they are. You are personally guaranteeing the payment of your business’s debt. No matter what.

Finance providers use guarantees for exactly that reason: it gives them more assets as security if something goes wrong. Your assets as well as those of your business.

As business owners, we plan for the future – we look for opportunities. Most business owners are optimistic by nature. It’s why we start businesses: to build something better, to have freedom, to grow something for our families.

Sometimes in business, the unexpected happens. We have all been through the global pandemic, we can lose a major customer or a key staff member may get sick. There are many other things that can go wrong. And if your business can’t pay, the onus falls on you.  

All because you signed a personal guarantee.

Be very careful with personal guarantees

If a working capital finance solution requires you to give a personal guarantee, please understand that it’s a warning sign.

At Thriver, we believe that if you’ve got a great business, you need worry-free business finance that:

  1. Keeps your personal assets personal
  2. Gives you the funds to unlock your business potential
  3. Gives you the freedom to make the decision you want.


by Rob Connell / September 10, 2021