A personal guarantee is a legal commitment that makes the guarantor personally responsible for the company's debt which it relates to. If your company does not make the payments due under the finance agreement, you can be asked to make these payments yourself using your own money and assets (like your income or savings).

A personal guarantee applies when an individual, such as a company Director/LLP member, agrees to take personal responsibility for a business finance agreement. This typically occurs when a lender requires additional security for a loan, lease or hire purchase agreement.

It is your responsibility to read the terms of the personal guarantee and the finance agreement before signing in order to understand:
• The extent of your personal financial liability.
• Your rights to seek independent legal advice before signing.
• When you can be asked to personally repay the company’s debt i.e. if the company fails to keep up repayments.

Yes, all guarantors can and should seek independent legal advice before signing a personal guarantee. You must understand the personal financial responsibility and potential risks you are taking on.

You would be personally responsible for the outstanding amount of the specific company debt the guarantee relates to if the company fails to keep up repayments. Interest could be payable if you are late making any payments due under the guarantee. Failing to make payments due under the guarantee could affect your personal credit record and may result in legal action.

Resigning as a Director/LLP member does not automatically release you from your obligations under the personal guarantee. Unless a formal release is agreed with Propel, you remain personally liable for the debt even if you are no longer involved in the company. You can request regular statements and monitor the outstanding debt.

If you no longer have a significant control or interest in the company, the personal guarantee will still apply until such time as Propel formally agree to release it. 

If the company is 14 days or more late making a payment due under the finance agreement you may be contacted under the personal guarantee.

A release from a personal guarantee is at Propel’s discretion and typically needs:
• The business having fully repaid all payments due under the finance agreement OR a replacement guarantor being appointed; and
• Written confirmation from Propel that you have been released from the personal guarantee.
 

As a guarantor, you are entitled to fair treatment in accordance with the FLA Business Finance Code, including:
• Clear and transparent communication about your responsibilities.
• The right to seek independent legal advice before signing.
• A fair approach to collections and enforcement, with consideration of your circumstances.

If you have any questions or require further clarification, we recommend you:
• Contact Propel directly; and a member of our team will be able to provide further information on your options.
• Contact any third party that introduced you to Propel as they may be able to provide further support.
• Contact your legal or financial advisor who should be able to answer any questions you have.