Don’t Sign That Personal Guarantee Yet

If you’re about to sign a business loan this month, and there’s a good chance you are, because September is when the finance really starts moving, do one thing first. Don’t sign the personal guarantee.

Not because you can’t. Because you probably haven’t been shown what else is possible, and once your name’s on it, it’s not just yours anymore. It’s your partner’s. Your children’s. Whoever sits round your kitchen table, whether they’ve read a word of the agreement or not. That’s how a business problem turns into a lost holiday, or a lost house.

I had a client recently in exactly this position. They were about to sign for a £200,000 finance loan, straightforward, standard guarantee, full amount, no negotiation. We looked at it properly first instead, and got a facility through in six days flat, capped their guarantee to a fraction of what they’d been about to agree to, and it was cheaper too. They were genuinely shocked. Less risk, lower cost, and it barely took longer than signing what was already on the table.

That’s not always possible. Every case is different, and I won’t pretend otherwise. But it’s never possible if nobody’s asked the question, and going direct, nobody ever does.

So if there’s a loan sitting in your inbox right now waiting for a signature, and there probably is, don’t sign the guarantee section until you’ve spoken to me first. It costs you nothing to ask, and it’s your family’s name on that guarantee as much as yours.

Do you need someone on your side? I’m Mark Smillie.