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Personal guarantees and the security package

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The security package is everything the lender can reach if the loan isn't repaid — and on a company bridge it reaches further than most borrowers realise when they sign. None of it is sinister; all of it is negotiated better when understood. Here's the full stack, from the property outwards.

The stack, layer by layer

The legal charge over the property is the foundation — first or second ranking, registered at Land Registry, the thing that makes this secured lending at all. On company borrowing, a debenture usually comes next: a charge over the company's wider assets, fixed over what can be fixed and floating over the rest, typically carrying a negative pledge — no new security to anyone else — and restrictions on disposals without consent. For an SPV that owns one property and does nothing else, the debenture adds little in practice; lenders take it because it's cheap insurance and it blocks anyone else taking it. Where multiple lenders share security — a second charge behind a mortgage, mezzanine behind senior — a deed of priority fixes the queue and each lender's cap, and the negotiation of that deed belongs to the lenders, on a timeline you can chase but not control.

Personal guarantees — the layer that follows you home

The PG is the clause that pierces the limited company. Directors and significant shareholders promise that if the company doesn't pay and the security falls short, they will. Almost every SPV bridge carries one, so the negotiation is rarely whether — it's scope. The questions that matter: Is it capped, and at what — a percentage of the facility, or all monies? Does it cover just this loan or everything the company ever owes this lender? Is it joint and several among guarantors — meaning the lender can pursue any one of you for all of it, and usually will pursue the easiest? What triggers release — repayment, or repayment plus the expiry of clawback periods? And does it include an indemnity component, which survives defects that might void a plain guarantee?

Independent legal advice isn't a formality to endure; it's the one moment a professional whose duty is to you personally walks through the worst case. Use the hour properly. Lenders require the ILA certificate precisely because it prevents you arguing later that you didn't understand — so make sure you actually do.

What's negotiable, and when

Leverage governs everything: at 60% loan-to-value with a strong sponsor, PG caps of 20–30% of the facility are commonly achievable in the current market; at 75% with a first-timer, expect closer to full. Caps, carve-outs for specific assets (the family home is the classic ask, sometimes granted, never assume), several rather than joint-and-several liability between unrelated shareholders, and defined release conditions are all live negotiating ground as of July 2026 — but only before completion. Afterwards, the package is the package.

What enforcement actually looks like

Worth demystifying, because fear of the unknown makes people sign faster than they should. A PG is called only after the security route disappoints — property sold, shortfall crystallised. The lender's demand letter starts a negotiation more often than a court case: settlements, payment plans and reduced lump sums are everyday outcomes, because lenders price recovery time like everyone else. Ignore the demand, though, and the machinery is real — statutory demands, judgment, charging orders over personal assets, bankruptcy proceedings at the far end. The practical moral is the same one that runs through all bridging: guarantors who engage early and bring numbers get deals; guarantors who go quiet get process.

Between co-guarantors, do your own diligence before signing jointly and severally with anyone. The lender will pursue whoever is easiest to recover from — which, if your fellow shareholder's wealth is a rumour, is you. A private deed of contribution between guarantors, setting out who bears what share if the PG is ever called, costs little to draft and prevents the second-worst conversation of your life from following the worst one.

Cost-overrun and shortfall guarantees

On works-heavy deals a lender may add narrower guarantees: cost overruns on the build, or interest shortfalls. These are more common in development finance but appear on heavy refurbs. Treat them as separate documents with separate caps — an "unlimited cost overrun guarantee" quietly converts a capped PG into an uncapped one through the side door.

Keep a one-page register of every guarantee you've ever signed: lender, cap, scope, release condition, status. Sponsors accumulate PGs the way attics accumulate boxes — and the ones that hurt are always the ones nobody remembered were still live when the next deal's lender asked for a personal asset statement.

Matthew Dailly — arranging bridges since 2004

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