I set up a LTD last year, but due to Covid we did not start trading until this year 2021.
Business is going pretty well, and in the past few weeks with the lock down restrictions being lifted, we are very busy.
I need to expand the company and went to my bank to request a business loan, however the bank said I would need to sign as guarantor as I am the Director of the company.
I own my own property, and if I sign as guarantor, and the loan is not repaid, I am worried I could lose my home.
Is there anyway to get a loan without me being a guarantor?
Thanks in advance.
From what you have stated, since your business is new, and doesn’t have a history of trading, or a track record of sales and revenue, the bank requested you to guarantee the loan to strengthen their side and reduce their risk.
This is how lenders lend to new businesses.
I understand your concerns about being a guarantor, because you are correct, if for any reason the company could not repay the loan, the bank would seek payment from you as the guarantor, and if you could not repay the loan, they could attempt to collect the loan in various ways.
Having an asset such as a property, could be an issue for you if the bank tried to obtain a CCJ or if they were to make you bankrupt.
Alternate ways to get a loan for a new business can prove difficult.
Does the business have any assets of its own? Machinery, vehicles, property?
These could be pledged as collateral if needed.
Also if the company has a strong accounts receivable, even future receivables can be used to try and secure a loan.