Do I need a guarantor to get a business loan?

2 min read

Not alwaysDepends on strength

Younger firmsMore likely

DirectorUsual guarantor

No-guaranteeOptions exist

When a guarantor is needed

A guarantor — usually a director giving a personal guarantee — is asked for when the company alone does not fully reassure the lender: a younger business, a smaller balance sheet, a larger ask relative to the company, or some adverse history. The guarantee gives the lender a backstop where the company's own strength falls short.

When you can avoid one

An established, profitable company with a solid balance sheet can frequently borrow unsecured and unguaranteed, because it is strong enough to stand on its own — see no-guarantee borrowing. Sometimes company security, rather than a personal guarantee, satisfies the lender instead. The guarantee guide sets out the alternatives.

If you need one

Usually the guarantor is you or a co-director; occasionally a lender accepts a third party with sufficient assets. Understand the exposure, ask whether the guarantee can be capped or dropped for a slightly higher rate, and confirm the company can genuinely service the loan on the affordability calculator so the guarantee is never called.

Frequently asked questions

Can I get a business loan without any guarantee?

Yes, if your company is strong and established enough to reassure the lender on its own. Newer, smaller or higher-risk applications usually need a director's guarantee, though company security can sometimes substitute.

Who can act as a guarantor?

Most often a director of the borrowing company. Some lenders accept a third-party guarantor, such as a family member, if they have enough assets and take independent advice. The guarantor takes on serious personal liability either way.