A guarantor is a person or company that agrees to step in and repay a debt if the main borrower fails to. In business lending, lenders sometimes ask a director or a parent company to act as guarantor so they have someone else to pursue if the borrowing company cannot pay.
How a guarantee works
A guarantor signs a separate legal document alongside the loan agreement. If the borrower defaults, the lender can ask the guarantor to cover the outstanding balance, often up to an agreed limit.
How Credicorp is different
Credicorp lends only to UK limited companies and LLPs, and the loan is made to the company itself. We do not take personal guarantees from directors. That means your personal assets are not pledged against a Credicorp Flex or Slice facility.
- The borrower is the company, not any individual.
- No director personal guarantee is required.
- Always read any guarantee terms in full before signing one with any lender.
Because we sit outside the FCA consumer-credit regime, Credicorp business borrowing is not covered by the Financial Ombudsman Service or FSCS.
Why lenders request guarantees
Lenders often ask for a guarantor because it gives them an additional route to recover money if the primary borrower cannot pay. In business lending, the borrowing entity is usually a limited company with limited liability, meaning creditors can only pursue the company's own assets. A personal guarantee from a director bridges that gap, allowing the lender to reach the director's personal wealth if the company defaults.
From a lender's perspective, guarantees reduce risk and can make credit available to businesses that might otherwise be declined or offered less favourable terms. Directors who sign guarantees take on personal exposure, which is why it is important to understand whether a lender requires one before you commit to a facility. The presence or absence of a guarantee fundamentally changes your personal financial risk.
Your liability with Credicorp
Because Credicorp lends to the company itself and does not require a director personal guarantee, your personal assets remain separate from the borrowing arrangement. If your company faces difficulty repaying, Credicorp's recourse is against the company as a legal entity, not against you personally. This structure limits your personal exposure and means your home, savings, or other personal property are not pledged to secure the debt.
The absence of a personal guarantee aligns with Credicorp's exempt business-lender model. We serve UK limited companies and LLPs exclusively, and our risk assessment focuses on the company's financial position and trading performance. Directors still have duties under company law, but those duties are distinct from contractually guaranteeing a debt. If your company's circumstances change, contact Credicorp directly so we can discuss options together.
See also: A debt collection agency has contacted me - is it genuine?, What is a hard credit search? and What is a novation?.