Growing numbers of directors are losing personal assets and in some cases their entire livelihoods after signing business loans backed by Personal Guarantees, according to insolvency specialists.
Antony Batty & Company, the Oxford-based business recovery and insolvency specialists, has urged company directors to fully understand the implications of Personal Guarantees before signing borrowing agreements, as economic pressures continue to impact businesses heading into 2027.
Director Lawrence King said: “We're seeing an increasing number of directors lose far more than their businesses because they signed a Personal Guarantee without fully understanding the consequences.
“Many assume their personal assets are protected because they operate through a limited company, only to discover too late that their home, savings and financial future are on the line.”
Mr King added: “We're not saying don't borrow. Businesses need finance to survive, invest, and grow. But directors must understand exactly what they are signing. In difficult economic conditions, a Personal Guarantee can turn a business problem into a personal financial crisis.”
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A Personal Guarantee is a legally binding agreement that makes a business owner or director personally liable for company borrowing if the business is unable to repay its debts.
Commonly attached to commercial loans, overdrafts, invoice finance agreements and commercial rent arrangements, Personal Guarantees can help businesses access funding that might otherwise be unavailable.
However, if a business collapses and cannot meet its repayment obligations, lenders can pursue the guarantor directly, effectively bypassing the protection usually afforded by limited liability.
In some cases, directors can face claims against their homes, vehicles, savings, and other personal assets, and may even face bankruptcy.
The Federation of Small Businesses found that 78 per cent of directors who applied for finance in 2025 were asked for a Personal Guarantee.
Mr King added: “The recent budget may have afforded businesses a little breathing space, but more challenging times are undoubtedly ahead and our strongest advice to directors as we move into 2027 is to think very carefully before agreeing to borrowing that requires a Personal Guarantee.
“We have seen situations where directors have unknowingly put their homes, savings, and entire financial future on the line.
“Any hope of us rescuing a struggling business can be stopped in its tracks when a lender moves to enforce a Personal Guarantee. At that point, creditors simply want their money back."
Mr King added: "The most important message is this: don't just skip through the small print and sign. Before taking out any borrowing, understand exactly what is at stake. If your business cannot repay that debt, you could end up losing everything you have worked for.”
Antony Batty & Company is urging directors to seek professional advice before entering any borrowing arrangement that includes a Personal Guarantee.
Speaking to an accountant, finance adviser or insolvency specialist before signing can help business owners fully understand the risks involved and explore alternative funding options.
For directors already experiencing cashflow pressures or financial difficulties, early action is critical.
The sooner professional advice is sought, the greater the range of options available, according to the company.
These may include restructuring debt, negotiating with creditors, implementing a Company Voluntary Arrangement (CVA), entering Administration, and helping minimise the personal impact of guarantees being called in.
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