Independent Legal Advice on a Personal Guarantee

Understanding Your Responsibilities Before You Sign

Banks and other lenders often require a personal guarantee when a business or individual takes out a loan, particularly where the borrower is a limited company or doesn’t have significant assets.

If you’ve been asked to give one, it’s vital that you fully understand the risks involved and get proper legal advice before proceeding. This is often a requirement and pre-condition of the lending.

At Hopkins Solicitors, we provide independent legal advice on personal guarantees in a clear, efficient and approachable way. We’ll explain exactly what the guarantee means for you personally, so you can make a fully informed decision.

We understand that signing a personal guarantee can feel daunting.

Our role is to guide you through it calmly and clearly, making sure you’re fully aware of your responsibilities without overwhelming you with legal jargon.

What’s Involved

The process is usually fairly straightforward but must be handled carefully and individually. Our service includes:

• Initial discussion – to understand the context for the lending, including the purpose and the make-up of the borrowing entity.
• Reviewing the personal guarantee – and any related loan documentation to ensure we understand the full picture and can advise you appropriately.
• A one-to-one meeting – usually this has to be in person but it may be possible to do this remotely if the lender accepts this. We will go through the terms of the guarantee and explain your obligations, potential liabilities and the consequences of enforcement.
• Confirming our advice – including the practical consequences and potential effects of enforcement. If you do go ahead, we will also confirm to the lender that you have received independent legal advice and that you understood the nature and effect of the guarantee.

You’ll speak directly with a lawyer who is experienced in this area and focused on protecting your interests.

It’s not just a formality, it’s your personal financial future.

Things to Consider

Before you sign, it’s important to think about:

• What are you personally liable for? Guarantees may be limited but can be unlimited, meaning your home and other assets could be at risk.
• Who else is signing? If you’re giving a joint guarantee (e.g. with a co-director) you may be jointly and severally liable – this means that each of you can be required to pay the full amount.
• Is there any way to limit your exposure? We can advise on potential ways to negotiate or limit liability in certain cases.
• Is the business financially stable? If you’re being asked to give a guarantee, it’s worth reviewing the business’ ability to repay the loan and whether you have sufficient control over the business repaying the loan or taking any additional lending that you may then be personally liable for.

Let’s get started

We’re often able to offer this as a fixed-fee service for £450 plus VAT and we may be able to accommodate discounts for more than one related guarantee.

We can work flexibly to meet tight timescales, especially where funding arrangements are time-sensitive.

Please get in touch with a member of our team – we’ll be happy to talk through your plans and explain how we can help.