2 min read
What it means
When you sign a personal guarantee, a cap sets the ceiling on what the lender can recover from you personally. An uncapped guarantee exposes you to the full outstanding debt plus interest and enforcement costs; a capped one limits it to an agreed figure. The cap is a negotiable term, not a fixed feature.
What this means for your company
If you must give a guarantee, negotiate a cap you could realistically meet, ideally a fraction of the loan. Also look at whether it is joint-and-several with co-directors (each fully liable) and whether guarantee insurance is available. Better still, borrow with no personal guarantee at all — then there is no cap to worry about.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Is an uncapped personal guarantee normal?
Some lenders present one, but it is heavily weighted to their favour. Always ask for a cap. An uncapped guarantee can expose you to far more than the original loan once interest and costs are added.
Can I insure a personal guarantee?
Yes — personal-guarantee insurance covers a proportion of the guaranteed amount if it is called. It costs a premium but can be worth it where a guarantee is unavoidable and the sum is significant.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.