Personal Guarantee Template
A personal guarantee lets a director or owner stand behind a company's debt — a powerful protection for the creditor, and a serious commitment for the guarantor.
What's included
- Understand what a personal guarantee does
- See the key elements a guarantee usually contains
- Appreciate why guarantees must be signed knowingly
- Recognise the risks for the guarantor
- Know why legal review is especially important here
8 min read
The template
This is a general template for a director's guarantee of a company's debts. Guarantees are high-stakes documents — treat the placeholders as prompts, not final wording.
PERSONAL GUARANTEE
Guarantor: [Full name] of [address]
Creditor: [Creditor legal name] ABN [ABN]
Customer: [Company name] ACN [ACN]
Date: [Date]
1. Guarantee
The Guarantor unconditionally guarantees to the Creditor the due
payment of all amounts the Customer owes or will owe the Creditor
under the trading terms ('the Guaranteed Money').
2. Payment on demand
If the Customer does not pay on time, the Guarantor will pay the
Guaranteed Money to the Creditor on demand.
3. Continuing guarantee
This guarantee continues until all Guaranteed Money is paid and is
not discharged by changes to the trading terms or the account.
4. Indemnity
[Optional — see the separate guarantee and indemnity template.]
5. Independent advice
The Guarantor confirms they have had the opportunity to obtain
independent legal and financial advice before signing.
Signed by the Guarantor: ______________ Witness: ______________Why this one needs care
A guarantee can expose someone's personal assets to a business debt, so the law is alert to whether the guarantor understood and freely entered into it. Guarantees are commonly challenged on grounds such as not having been properly explained, undue influence, or defective execution. That is exactly why the "independent advice" line exists and why proper signing and witnessing matter so much.
How to use it
Take the guarantee at onboarding as part of the credit account, not in a panic once the account is overdue. Make sure the guarantor signs in their personal capacity, name them in full, and keep the original. If you build your credit application around solid terms of trade — see the free Payment Terms Generator for the payment settings — the guarantee sits naturally alongside them. Should the account later default, a clean guarantee strengthens any referral when you refer the debt.
Not legal advice
This is a general template and general information only — not legal advice. Personal guarantees carry significant legal consequences for the guarantor and are frequently disputed. Have any guarantee drafted or reviewed by a lawyer before it is signed or relied upon.
Tips
- A guarantee puts a person behind a company's debt.
- Take it at onboarding, not after default.
- Proper signing, witnessing and advice reduce challenge risk.
- This is a high-stakes document — get it reviewed.
FAQ
Does a guarantee need a witness?
Witnessing is good practice and often expected for guarantees, though requirements vary. This is general information, not legal advice — confirm before relying on it.
Can a guarantor get out of it later?
Guarantors sometimes challenge guarantees, for example on advice or execution grounds. A carefully prepared, well-signed guarantee is harder to unwind.
Is a guarantee the same as an indemnity?
No. They are related but distinct; many documents combine both. See the separate guarantee and indemnity template.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.