Personal guarantee template
A personal guarantee is a written promise by an individual, often a company director, to pay a business's debts to a creditor if the business does not. It is signed before the creditor opens a credit account, lends money or keeps supplying on credit. The guarantor, the creditor, the customer, the credit and the cap on liability change each time.
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What changes each time
18 values. Everything else is your wording, kept exactly.
The parties
- Date of the guarantee
- Guarantor's full name and home address
- Creditor's full legal name, company number and address
- Customer's full legal name, company number or address
- Guarantor's relationship to the customer
The credit
- Credit being given
- Amount lent, if a loan
- Agreement or terms, with date
- Payment for the guarantee, if the debt is already owed
Limits
- Days to pay after a written demand
- Cap on the guarantor's liability
- Credit limit above which a change needs the guarantor's agreement
- Notice to end the guarantee for the future
- Interest rate above Bank of England base rate
Acknowledgement and signing
- Independent legal adviser and firm, or a choice not to take advice
- Guarantor's name and date signed
- Witness's name, signature and address
- Creditor's signatory name, job title and date
The rules it usually needs
Written in plain English when the template is set up.
- One of several wordings
“State the credit as opening a credit account, continuing to supply on credit, or lending a stated sum.”
Only the chosen description appears.
- One of several wordings
“Describe the creditor and customer as a company with its number and registered office, or as an individual with an address.”
Only the chosen form appears.
- One of several wordings
“Cap the guarantee at a stated amount or leave it unlimited.”
The capped form states the limit, plus interest and costs after demand. The unlimited form warns that it could cover all of the customer's debts.
- One of several wordings
“Say the guarantor's liability is not increased by a credit limit increase above a stated sum without their written agreement, or leave this out.”
Only the chosen wording appears.
- One of several wordings
“Record that the guarantor took independent legal advice, naming the adviser, or chose not to.”
Only the chosen statement appears.
- Only when…
“Include a payment to the guarantor only when the creditor is not giving new or continued credit.”
The sum and the guarantor's confirmation of receipt appear.
- Only when…
“Include the words 'within the cap' on changes to the agreement only when the guarantee is capped.”
The clause appears for a capped guarantee.
- Only when…
“Include a witness block only when the creditor wants evidence of signing.”
The witness's name, signature and address appear. A witness does not make it a deed.
Questions people ask
What is a personal guarantee?
A promise by an individual to pay a debt of a business, usually a company, if the business cannot or does not.
Is a personal guarantee legally binding?
A guarantee must be in writing and signed by the guarantor to be enforceable, and the guarantor must have received something in return, such as the creditor opening a credit account.
What is the difference between a capped and an unlimited guarantee?
A capped guarantee limits what the guarantor can be asked to pay to a stated sum. An unlimited one covers everything the customer owes under the agreement.
Can a guarantor withdraw?
The template lets the guarantor end the guarantee for the future by written notice, but they remain liable for what is owed by then.
Should the guarantor take advice?
The template says the guarantor has been advised to take independent legal advice and records whether they did. A guarantor puts their own money and assets at risk.
Use this template
It opens in DocuWeave as a template you can check, change and publish. Nothing is used until you do.