Personal and Director’s Guarantees
In small business run through a trust or a company, it’s common for your various suppliers and credit providers to ask you as the business owner to provide personal guarantees in support of the business’ credit requirements. The nature of these guarantees are usually that they are unlimited and continuing, meaning that you’ll be personally liable for whatever the business may incur in relation to that creditor while that guarantee is effective.
If you’re not keeping track of where you’ve given these personal guarantees, you could be exposing yourself to unknown personal liabilities now and in the future. What happens if you sell the business or are replaced as a director of the company? The guarantee could still bind you regardless if you don’t take steps to have your obligations discharged in some way. Generally, the terms of the guarantee will advise you how this can be achieved, but in practical terms it might mean replacing your guarantee with another form of acceptable security.
Whatever the case may be, make sure you’re keeping track of your personal guarantees otherwise it might be something that will come back to haunt you in years to come.