Personal Guarantees

Bridging finance is a fast, flexible funding solution that companies often use to cover short-term financial needs, particularly in the property market. Whether you are looking to secure capital for a property acquisition, renovation, or to manage cash flow during a transitional period, bridging loans can provide a crucial source of liquidity. However, to mitigate the risks associated with this type of high-value, short-term lending, lenders typically require some form of security — one of which is a personal guarantee.

As a company considering bridging finance, it is important to understand how personal guarantees work, their implications for your business and directors, and how to mitigate the associated risks. At Blackstone Solicitors, we advise businesses across England and Wales on all aspects of bridging finance, including the complexities surrounding personal guarantees.

Contact our secured lending and property finance solicitors today to find out more about how our specialists can help you and your company. Either call us on 0330 808 0839 or complete our online enquiry form and a member of the team will give you a call back.

“The best bar none, like the song. Simply the best out of all the rest.”

– John Hamilton

What is a Personal Guarantee?

A personal guarantee is a legal commitment by an individual (usually a company director or shareholder) to repay a loan if the company is unable to meet its repayment obligations. In the context of bridging finance, a lender may require a personal guarantee as an additional layer of security. This means that if the company defaults on the loan, the lender has the right to pursue the individual guarantor’s personal assets to recover the outstanding debt.

While the company remains the primary borrower, a personal guarantee ensures that the lender can still recoup their money even if the business cannot meet its obligations. As a result, lenders view personal guarantees as a way to reduce their risk, particularly when lending to smaller businesses or companies with limited trading histories.

Why Do Lenders Require Personal Guarantees?

Bridging loans, by their nature, involve higher risk for lenders. They are typically short-term, interest-only loans that are secured against property or assets, and are often used in situations where speed is critical, such as completing a property transaction quickly or bridging a gap before a longer-term financing solution is in place.

For businesses, the need for fast, flexible funding can be crucial, but from a lender’s perspective, the risk of default can be significant. This is particularly true if the company has limited trading history or insufficient assets to secure the loan fully.

In such cases, lenders may require personal guarantees to provide additional security and reduce the risk of non-repayment. A personal guarantee gives the lender the right to claim against the personal assets of the company’s directors or shareholders if the company defaults on the loan. These assets could include personal savings, property, or other valuable items owned by the guarantor.

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Our Approach

We are 100% committed to ensuring each and every one of our clients receives the highest quality service and we will go the extra mile to ensure that you are happy with the results gained. We understand it can sometimes seem rather complicated to deal with matters relating to property finance this is why our friendly and approachable team always take a sympathetic and understanding approach, ensuring that you receive the support you need.

We believe communication is of the utmost importance. We will therefore keep you updated as things develop, and our solicitors will provide practical, straightforward legal advice so that you can be confident everything is progressing as you would like.

Personal guarantees play a key role in bridging finance, providing lenders with the additional security they need to approve short-term loans to businesses. However, for directors and shareholders, providing a personal guarantee can pose significant financial risks, particularly if the company encounters difficulties repaying the loan.

Before agreeing to a personal guarantee, it is essential to fully understand the terms and conditions, assess the risks, and explore alternative options where possible. Seeking professional legal advice is also crucial in ensuring that the terms of the guarantee are fair and that your personal and business interests are protected.

At Blackstone Solicitors, we have extensive experience advising companies on personal guarantees in bridging finance. If your business is considering bridging finance or needs advice on the implications of providing a personal guarantee, contact us today to discuss how we can assist you.

Why Legal Help is Important

Secured lending and property finance involve complex legal and financial arrangements that require expert advice. At Blackstone Solicitors, we work closely with businesses and individuals across England and Wales to ensure that every aspect of the transaction is handled with precision. We can assist in negotiating terms, ensuring regulatory compliance, and mitigating risks, all while keeping your business’s best interests at heart.

With our in-depth knowledge and experience, we ensure that you are fully protected throughout the lending process, from initial negotiations to final completion. If you’re looking to secure finance for a real estate project or are a lender, get in touch with our team today to discuss how we can assist you in achieving your business goals.

Our Services

The specialist solicitors at Blackstone provide a range of services to help businesses with their finances. These include, but are not limited to, the following:

Get in Touch

For more information about our services and how our secured lending and property finance solicitors can help you with any aspect of your financial dealings, do not hesitate to get in touch. You can call us on 0330 808 0839 or allow us to call you back by completing our online enquiry form.

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