Personal guarantees (PG’s)
Will Brand – Senior lending Manager
Personal Guarantees can be a sticking point for some clients, in today’s market they are pretty much a requirement across most lenders with the exception of a few.
Some clients do not like them due to the fact they would like to base the loan solely on the business and this is an understandable stand point for some with good turnover, strong net profits and solid company background. However, keeping to the terms of your contract basically leaves the PG in the background having no effect on the loan.
When considering a loan, risk is the major factor for a lender. They are risking capital based on numbers of your business accounts, credit ratings, cash flow and security. A client with security possesses less risk, this helps to leverage risk from the lender and in turn hopefully brings the interest rate down. Of course this is different for individual situations but it always helps. PG’s simply allow the lender to feel more comfortable with a deal and places more emphasis on the client to keep up with their repayments.