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Why is there no personal guarantee for loans to non-limited companies?

A personal guarantee is a form of security from the Director/s of the business taking the loan out. In this agreement, the Directors personally guarantee that if their limited company can’t repay the loan then they will personally repay it. Although, as with all guarantees or security, Funding Circle cannot guarantee that all your loan will be recovered in the event of default of the borrower.


In the case of a non-limited company, the business owner and the company are legally the same entity – the owner(s) are the company/general partnership and are therefore personally liable for all the debts, which negates the need for a personal guarantee.

 

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