Business credit card personal guarantees: what they mean for you

A personal guarantee on a business credit card is a legal promise from a director or owner to repay the card debt personally if the business can't. Most business credit cards ask for one, and it matters because it means that the guarantors own assets and money are on the line if the business defaults. 

This guide explains what a personal guarantee is, why lenders use them, when you might avoid one, the risks involved, and how to keep your personal liability in check. 

Please note, this information is for guidance only. We strongly recommend that all guarantors take independent legal advice before providing a guarantee.

What is a personal guarantee on a business credit card?

A personal guarantee is an agreement between a business owner or director and a finance provider, like Funding Circle or an investor on our platform. According to Government guidance for directors, the agreement explains that if the business can’t keep up with loan or credit repayments, then the director or owner becomes personally responsible for repaying the debt.

Personal guarantees for credit cards exist because a limited company is a separate legal entity from the people who run it. Normally that separation keeps you apart, since the company is responsible for its own debts. A personal guarantee means that you take responsibility for that particular debt from the business in some circumstances, giving the lender a way to recover the money from you if the company can't pay.

Why most business credit cards require one

Most business credit cards are unsecured, meaning there's no asset like property or equipment held as security against them.

Without security to fall back on, a lender takes on more risk. A personal guarantee reduces that risk by giving them recourse to an individual if the business can't repay. 

Lenders are more likely to ask for one when a company is newly formed, has a shorter-than-usual trading history, has a weak credit profile, or when the borrowing involved is especially large. For many smaller and younger businesses, a guarantee is simply part of getting approved.

Am I responsible for business credit card debt?

Whether you're personally responsible depends on your business structure and whether you've signed a personal guarantee. 

• If you run a limited company and haven't given a guarantee, the company is liable for the card debt, not you personally, because of that separate legal status. 

• If you've signed a personal guarantee, you can be made personally responsible for the outstanding balance if the business can't pay.

So the guarantee is the thing that bridges the gap between company debt and personal liability. Before you sign, it's worth being clear on exactly what you'd be agreeing to cover.

When you might not need a personal guarantee

A guarantee isn't always required, though going without one is less common. It’s important to note that criteria vary widely from lender to lender, so make sure you do your own research before committing to anything. 

Lenders are more comfortable lending without a personal guarantee when a business has a solid track record. 

That usually means a few years of trading, healthy and predictable finances, and a strong business credit profile. Sometimes, a good credit history and reliable repayment record can give a lender enough confidence to offer better terms, and in some cases reduce or remove the need for a guarantee. Newer or smaller businesses are more likely to be asked for one. 

The risks of a personal guarantee

A personal guarantee is a serious commitment, so it helps to understand what's at stake before you agree to it.

What happens if the business can't pay

If the business defaults and you've given a personal guarantee, the lender can ask you to settle the debt from your own money. 

Personal assets such as your savings, car or home could be used to cover what's owed. If those aren't enough, you could face personal bankruptcy. Signing a guarantee doesn't affect your personal credit score on its own, but missing the personal payments that follow a default can damage it and make future borrowing harder.

It's also worth checking how long the guarantee lasts. Some end once the balance is cleared, while others stay in place until you formally bring them to an end, so read the terms closely and get advice if anything is unclear.

How to reduce your personal liability

You can't always avoid a personal guarantee, but you can manage how much risk it carries.

• The most practical step is to keep the balance under control and clear it in full each month where you can, so there's little or no debt for a guarantee to apply to. 

• Setting spending limits, keeping business and personal spending separate, and staying on top of repayments all help. 

• Over time, building a strong business credit profile can put you in a better position to borrow on the company's own reputation, with a smaller guarantee or none at all. 

Where a guarantee is unavoidable, you may be able to agree to a capped (limited) guarantee rather than an unlimited one, which is another point worth raising before you sign.

Personal guarantees and Funding Circle

The Funding Circle Cashback business credit card is designed for incorporated UK businesses (limited companies) and usually requires a personal guarantee. You can find more information about our borrower conditions here.

A few things worth knowing if you're considering it:

• It's available to limited companies, and only limited companies can apply without affecting their credit score.

• You'd need to be trading for at least 1 year with an annual turnover of at least. £30,000.

• It gives you a credit line of up to £250,000, with no annual fees and no foreign exchange fees, plus cashback on what you spend.

You can check the full terms, including anything relating to a personal guarantee, on the Cashback business credit card product page.

Business credit card personal guarantee FAQs

Do all business credit cards require a personal guarantee?

No, but some do, particularly for newer or smaller businesses and those with a limited credit history. Some cards aimed at larger, well-established businesses with strong financials may not require one. It's worth checking each card's terms before you apply.

What does signing a personal guarantee mean?

It means you agree to become personally liable for the card debt if the business can't repay it. If the business defaults, the lender can pursue you personally for the outstanding balance, which can put your personal assets at risk. Because it's a legally binding commitment, it's important to get independent advice before signing.

Can I get a business credit card without one?

It's possible but uncommon. Cards without a personal guarantee are usually reserved for larger businesses that can show a strong trading history and a healthy credit profile. Most smaller or newer businesses will be asked for a guarantee as a condition of approval.

When does a personal guarantee take effect?

A guarantee is typically only called upon if the account falls into arrears or the business defaults on what it owes. As long as the business keeps up with repayments, the guarantee usually sits in the background. The exact triggers are set out in the agreement, so check them carefully.

02/07/26: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.