The personal guarantee is the one thing nobody negotiates
The government will guarantee 70 per cent of your business loan. You will guarantee all of it.
Both sentences are published word for word on the Growth Guarantee Scheme pages of the banks doing the lending. Allica Bank and Bank of Scotland, read on 29 October 2026, carry them identically: "The scheme provides the lender with a 70% government-backed guarantee against the outstanding balance", and "The borrower always remains 100% liable for the debt". The taxpayer insures the bank. Nobody insures you.
Three hundred and forty-one companies were wound up by the courts in September, 25 per cent more than the same month a year earlier, on official Insolvency Service figures published on 20 October. It is the only line moving the wrong way, since every other category fell. Compulsory liquidation is the one that happens to a company rather than the one its directors choose. It is where a guarantee gets called.
Yesterday's Budget gave the British Business Bank and the National Wealth Fund another £20.4 billion, with what the Treasury's own summary calls "a particular focus on improving access to finance for smaller firms". More capacity to lend, then, which is decent news for anybody who has lately been turned down. Not a word about the paragraph at the back of the facility letter, which is where the risk actually sits.
What the government's guarantee actually guarantees
The scheme sits behind term loans, overdrafts, asset finance and invoice finance alike, and the 70 per cent is paid to the lender only once it has finished trying to recover from the borrower. It does nothing for you. What it does is make a lender comfortable lending money it would otherwise have refused, which is the point, and which is why what you personally promised matters more rather than less.
The scheme does carve out one thing. "Principal Private Residences cannot be taken as security within the Scheme", both pages say. In the same breath: "A Personal Guarantee may be required." A charge is security over a named asset. A guarantee is a promise to pay out of whatever you happen to have.
What a personal guarantee actually reaches
The British Business Bank's own guide, read on 29 October 2026, is plainer than most lenders' literature. A personal guarantee makes a director "personally liable for repaying the loan" if the business defaults or becomes insolvent, and "Personal assets such as your home, car, savings, and investments can be used to settle the business debts."
The same page carries the figure almost nobody quotes back at a lender. Some lenders will "request the full loan amount as a personal guarantee, while others will ask for as little as 20%".
Run that through a £200,000 facility. Guarantee the whole thing and you have personally promised £200,000. Guarantee a fifth and you have promised £40,000. The gap is £160,000, it is the same loan either way, and the only thing between the two numbers is whether anybody asked. That is illustrative, both percentages are the Bank's own as read on 29 October 2026, and it leaves out interest, costs and enforcement expenses, which a guarantee usually picks up too.
Lenders ask for guarantees for a reason, and it is not villainy. A director who will not stand behind his own forecast is telling the credit committee something, particularly when the accounts in front of them describe a company that no longer exists. The complaint is narrower. The rate gets haggled over, and so do the term, the fees and the covenants. Then the one clause with a house behind it goes through untouched.
Nor is anyone watching from outside. The Lending Standards Board, which set voluntary standards for business lending, formally closed on 31 October 2025, on Danske Bank's own customer notice, and nothing replaced it. Lending to a limited company is not consumer credit, and a guarantee given for it is not a retail product.
Three things to ask for before you sign
Ask for a cap, as a number, in writing. Not "limited to the facility", a figure. The British Business Bank's guide says some lenders settle at 20 per cent. Asking costs nothing and the worst available answer is no.
Ask what makes it stop. A guarantee that steps down as the balance falls, or ends on a date, or releases on a sale, is a different animal from one sitting open-ended while the company refinances twice. The Bank's guide suggests negotiating an earlier end date, and asking the lender to reduce the liability once there is a payment record behind you.
Take the legal advice properly. Many lenders insist on independent advice before a guarantee is signed, and some require a solicitor to witness it and confirm in writing that it was given. Treat that as the point of the exercise rather than the thing delaying completion by a day. Find one through the Law Society at lawsociety.org.uk. For free general help first, the Business Support Service offers free advice on 0800 998 1098, Monday to Friday, 9am to 6pm.
Purbeck sells personal guarantee insurance, which its site, read on 29 October 2026, describes as "designed to cover up to 80% of your risk", for loans up to £750,000, with premiums "as little as £50 per month". Insuring 80 per cent of a full £200,000 guarantee still leaves you exposed on £40,000, exactly where a negotiated cap would have left you. One costs at least £600 a year. The other costs an email.
Where we sit: we are a commercial finance broker rather than a lender, so the credit decision and the security are the lender's rather than ours. We are not directly FCA authorised and we work through authorised partners. None of this is legal advice or a recommendation about any particular facility. A guarantee is a contract, and it deserves reading by somebody who does that for a living.
The Budget found another £20.4 billion to lend to smaller firms. The half page deciding who actually pays it back when things go wrong is still the one nobody reads twice.
Get in touch
If you are weighing up a facility and want to talk it through before anything gets signed, give us a ring.
Pathfinder FX
1 Knights Court, Archers Way, Battlefield Enterprise Park, Shrewsbury, SY1 3GA
+44 (0)1743 290955
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