What happens when a personal guarantee on a business loan is called?

When a lender calls a personal guarantee, they issue a formal written demand to the director (or other guarantor) personally, requiring payment of the outstanding debt. If the demand is unpaid within the specified period (typically 7 to 28 days), the lender can initiate County Court proceedings against the director as an individual. A County Court Judgment (CCJ) obtained against a director personally appears on their personal credit file for six years and enables the lender to pursue enforcement against personal assets — including savings, investments, and potentially property. Where the lender also holds a registered second charge over a director's property, their security position is stronger and the route to enforcement quicker. A personal guarantee survives the company's insolvency — it does not disappear when the company is wound up, enters administration, or undergoes a CVA. Options for directors facing a personal guarantee demand include negotiating a settlement with the lender, challenging the guarantee on legal grounds, a Personal Voluntary Arrangement (IVA), or in the most serious cases personal bankruptcy. Professional advice should be sought immediately on receipt of any guarantee demand.