What Does PG Mean In Business Finance?
PG stands for Personal Guarantee.
It is a legally binding promise by a director or shareholder to repay a company’s borrowing personally if the company cannot. It converts what looks like company-only debt into an obligation that can follow the individual.
Personal guarantees are standard on most unsecured business lending. Where there is no asset behind the facility, the guarantee is the lender’s protection.
What A Personal Guarantee Is Not
A PG is not the same as putting your home up as security. Giving a guarantee does not place a charge on your property — that would be a separate legal step requiring separate documentation.
It does, however, make you personally liable for the debt, and a creditor enforcing a guarantee can pursue your personal assets through the courts like any other personal debt. The distinction matters legally but the exposure is real, and it should be understood properly before signing.
Things Worth Checking Before You Sign
- Is it capped? Some guarantees are limited to a fixed amount or percentage; others are unlimited and cover interest and costs as well
- Is it joint and several? With multiple directors, joint and several liability means the lender can pursue any one of you for the whole amount, not just your share
- When does it fall away? Guarantees often survive after you resign as a director unless formally released
- Is PG insurance available? Personal guarantee insurance exists and covers a proportion of the liability. It is worth pricing on larger facilities
Can You Avoid Giving One?
Sometimes. Facilities secured on a tangible asset need the guarantee less, because the lender’s protection comes from the security instead. Asset finance is secured on the asset, invoice finance on your sales ledger, and a merchant cash advance on card takings. Guarantees on these are often smaller, or not required at all.
Under the Growth Guarantee Scheme, personal guarantees are at the lender’s discretion, but a principal private residence cannot be taken as security.
Read more about business loans, or speak to us about the security a facility is likely to require.
General guidance only, not legal advice. Always take independent legal advice before signing a personal guarantee.
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