Also called: Directors guarantee
Director's guarantee
A director's guarantee is a promise given by a company director to be personally responsible for the company's debt if the company does not pay. It is standard on most commercial lending to private companies, including facilities described as unsecured.
What is a director's guarantee?
A director's guarantee is a promise given by a company director to be personally responsible for the company's debt if the company does not pay. It is standard on most commercial lending to private companies, including facilities described as unsecured.
Example
Two directors of a Pty Ltd company each sign a guarantee for a $150,000 business loan; if the company defaults, the lender can pursue them personally.
Why it matters
It removes the separation between company and personal liability for that debt, so it should be read carefully before signing.