My business contract asks for a personal guarantee. What am I signing personally?

You are opening a supplier account for your limited company. The order form looks routine until the signature section calls you “Director and Guarantor.” Before signing, separate the company's promise to pay from any promise you are making yourself.

A personal guarantee deserves its own reading, even if it is attached to an otherwise ordinary business agreement. This guide gives a document-reading method, with a UK borrowing example. It does not determine whether particular wording is enforceable in your jurisdiction.

First, identify your capacity

List every place you are named: the parties section, definitions, guarantee, indemnity and signature blocks. Is the company the customer, are you a guarantor, or does the agreement name both of you as customers? Do not rely on a job title beside your signature to resolve conflicting wording elsewhere.

Ask for the complete documents, including any separate guarantee deed and terms incorporated by link. The linked-terms guide helps you record the version you are being asked to accept.

Fill in this exposure worksheet

An “all monies” or continuing guarantee is a reason to inspect the scope carefully. Look for wording about later credit, contract variations and renewed obligations. Do not assume a figure in the main contract caps a separate personal obligation.

A fictional cap that needs a second question

Suppose a guarantee says “limited to $10,000 plus interest and enforcement costs.” The number is visible, but it does not describe a $10,000 all-in maximum. Ask whether the proposed cap includes those additions and which amounts can accrue after a demand.

Also check whether an indemnity creates a separate promise alongside the guarantee. The label alone does not tell you its effect. Ask for an explanation of how the provisions interact rather than treating one heading as a complete answer.

Leaving the company is a separate event

You might sell your shares, resign as director or close an account. Find the clause that says what each event does to the guarantee. Ask who can release you, whether release must be written and whether it covers existing liabilities as well as future ones.

If two owners sign, check whether the creditor can seek the whole covered amount from either one under the proposed wording. An informal agreement between owners to split a bill is a different document from the creditor's rights.

What the UK borrowing guidance says

The British Business Bank explains that a personal guarantee for business borrowing can make an owner or director personally responsible if the business cannot repay, putting personal assets at risk. It advises understanding the extent and conditions and obtaining independent specialist advice. Its guide also discusses asking about limits and an end date: personal guarantees for business borrowing.

That source concerns UK borrowing. Supplier credit, leases and service agreements can have different wording and legal requirements. Use it to understand why the distinction matters, not as a verdict on every guarantee.

Questions to send before signing

Please identify which obligations I would assume personally and provide the complete guarantee and related indemnities. Can we agree a cap inclusive of interest and costs, restrict it to [named facility or contract], and specify an end date and written release process? Please explain what happens if I leave the company, the facility changes or another guarantor is released.

This is a situation where independent advice before signing can change a personal decision materially. Bring the full agreement and your completed worksheet, rather than only a screenshot of the signature block. The prepare-for-a-lawyer guide helps you organise the questions.