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Commercial banks and other lenders risk their capital when they provide loans to businesses, so it is not uncommon for them to seek to protect their investment with a legally binding guarantee.

For many start-up businesses, a personal guarantee provided by a business owner, partner or director may be the only way to secure funding, and it can also provide access to higher loan amounts.

However, taking out a personal guarantee is not a decision to taken lightly, as you will be personally liable for the business’s debts if it fails.

What is a personal guarantee?

A personal guarantee is an assurance from a business owner, partner or other executive that they will become personally responsible for a business loan should the business default on the repayments.

Personal guarantees are particularly common in small business lending, where the business itself may not have the assets or track record to secure a loan independently.

The main purpose of a personal guarantee is to protect a lender’s position by providing them with security should the company be unable to meet its bills.

A personal guarantee can also influence the terms of the loan, such as more favourable interest rates or repayment schedules. It reflects a vote of confidence in your reliability and the viability of your business venture.

When a business has multiple owners, the guarantee is usually given “jointly and severally,” meaning a lender can choose who to pursue for the debt.

A guarantor who pays has a right of contribution from the others, but if the other parties were to disappear or be unable to pay, one individual could find themselves personally liable for the entire debt.

In practice, it is usual for a personal guarantee to be limited, which allows the lender to recover only a certain percentage of the loan from a given individual. However, the interest and expenses will be payable in additional to the amount secured through the guarantee.

An unlimited guarantee means the lender can recover the entire loan amount, plus interest and legal fees, by whatever means possible, if the borrowing business defaults on its loan, or even other loans that may be obtained by the same borrower.

The lender could take money from a director or guarantor’s personal assets, such as savings or properties – a substantial risk for the borrower.

In many cases, the use of a personal guarantee allows businesses to start up or expand successfully, and the guarantee is never called upon.

However, the potential pitfalls should still be considered before you agree to a personal guarantee.

When do I have to repay the loan?

You become liable under a personal guarantee when your business defaults on or becomes unable to repay a business loan and the lender makes demand.

If the borrower fails to make scheduled repayments or breaches other terms of the loan agreement, it’s likely that the lender will seek to enforce the guarantees and you’ll then become liable to pay the debt.

In cases where the primary borrower is a business that becomes insolvent and is unable to pay its debts, you’ll need to step in and meet your obligations under the loan agreement.

Additionally, certain loan agreements might specify situations under which your liability is triggered, beyond simply defaulting or becoming insolvent.

If you are not able to pay up immediately, the lender will normally look to discuss a payment plan rather than seeking bankruptcy, in order to maximise the amount they will receive.

Lenders are increasingly seeking charging orders against individuals’ homes, as this makes them a secured creditor, thus improving their position were the person concerned to go bankrupt.

It’s important that you understand fully the terms of your loan agreement and that you ensure the circumstances under which you will have to repay the loan yourself are outlined clearly.

Protecting yourself

It is often a lender requirement that you obtain independent legal advice from a solicitor before providing a personal guarantee, as this ensures you fully understand the legal risks.

For example, a personal guarantee can put your home at risk of being repossessed in the event that your business suffers financial problems and defaults on the repayments, other personal assets could also be at risk.

Therefore, it is more important than ever to seek independent legal advice from a personal guarantee solicitor to ensure you understand the risks and the circumstances under which you can be pursued for the value of the loan.

Personal guarantees with Palmers Solicitors

Our Company Commercial and Banking and Finance teams work together to provide essential business loan and startup funding legal advice, with fixed-fee arrangements to give you certainty and peace of mind.

We offer quick, clear guidance for personal guarantees, helping you understand your rights and obligations before entering into an agreement.

If you have already entered into an arrangement with a lender and your business is experiencing difficulties in meeting the repayment terms, we can check whether the guarantee has been correctly set up or whether there are grounds to dispute its validity.

We can also liaise with your lender to arrange a mutually acceptable repayment schedule which will allow your business to remain viable and also protect your residential property.

Get in touch with our company commercial team to find out how we can help you with directors’ personal guarantees. If you’re struggling with loan repayment liabilities, get in touch with our Banking and Finance team urgently.

We believe that working together brings the best results for our clients.

That’s why our Company Commercial and Banking and Finance teams work together to provide a joined-up service for businesses in Essex.

Our team boasts dedicated professionals who have hands-on experience in the sector, giving us a level of expertise that sets us apart from the competition.

We combine decades of cumulative experience in financial services with expertise in all aspects of company law.

Together, we ensure you have access to all the legal advice and services you need for business success at every stage in its lifecycle, from incorporation to sale or dissolution.

• Looking to acquire another company? Our Company Commercial solicitors will prepare the acquisition agreement, while our Banking and Finance team will assist to ensure that any finance in relation to the transaction is structured in the correct manner and ensure that the requirements of the lender are met correctly and timely.
• Need to provide a personal guarantee for a loan? We’ll advise you on your rights and the legal risks, but we’ll also help you restructure debt repayments.
• If you require assistance with buying assets from an Insolvency Practitioner, we can provide advice in relation to insolvency transactions and assist with the documentation
• Investing in commercial property? We can help you handle the legal paperwork and ensure that the requirements of the lender are met correctly and timely.

We’ve been providing expert legal advice for business clients for more than 40 years, serving from small to medium sized enterprises (SMEs), family businesses, and sole traders across Essex.

We make sure that we get to know your business thoroughly, so that we can provide a holistic, fully joined-up approach to meet your specific needs.

With access to the in-depth knowledge and expertise of both our Company Commercial and Banking and Finance teams, you can be confident that you’re receiving the very best in legal business advice.

Ready to take the next step? Get in touch to discover our joined-up business services today!

As an employer, it can be challenging to keep pace with the regularly changing rights and responsibilities that you have towards your employees.

One thing that has remained unchanged for two decades has been paternity leave save the amendments in 2024 which allowed fathers and partners to take their leave and pay as two non-consecutive blocks of 1 week in the first year after the birth or adoption of their child and provided some amendments to the notice requirements.

While mothers are entitled to 52 weeks of maternity leave, their partners are only entitled to two weeks of paternity leave (currently provided they meet the minimum length of service requirements). It does not apply to those that are self-employed. There is an entitlement to shared parental leave, however it has been criticised due to its complexity. A government review from 2023 suggested that 45% of dads were not aware shared parental leave was an option.

What is the case for increasing paternity leave?

Given that it was introduced in the Employment Act 2002 and has remained mostly static ever since, there are many who no longer feel that the two weeks of paternity leave reflect contemporary societal attitudes and values.

The disparity between the 52 weeks of maternity leave and the two weeks of paternity leave disproportionally places the emphasis of child raising on the birthing parent regardless of the dynamic of the couple.

Although paternity leave applies to fathers and same-sex partners alike, it is undeniable that paternity leave reinforces a patriarchal view of the domestic division of labour. It also complicates matters for male gay couples. Assuming one partner is the biological father, he will qualify for paternity leave if he will have some responsibility for the child, however his partner does not have any straightforward route to statutory eligibility for leave, except in surrogacy or adoption cases.

As a result, a group of MPs have recently come together to request six weeks of paternity leave as a replacement for the two weeks that are currently available.

How will paternity change in the future?

Even if the UK introduces six weeks of paternity leave, it will still fall short of many other countries.

The rules will bring the UK closer to the recent French ruling that permits working partners a 28-day paternity leave.

Spain has a more generous 16 weeks of paternity leave with full pay.

Yet Sweden is the place closest to a truly equal system by embracing 480 days of paid parental leave to be divided between parents accordingly, with 90 days reserved for the non-birthing partner.

On the other hand, the USA still does not have federally mandated paid paternity leave, so the UK is not the worst place for this issue in the West.

Change is slow, but it is worth employers understanding the potential scope of this issue.

As workforces become populated by more socially conscious younger generations, debates around equality are set to continue.

The statutory paternity leave is only a minimum, and employers are at liberty to create their own paternity rules if they wish to offer more time or more pay than the standard amount.

Given the tone of the ongoing conversation, there is scope for employers to get ahead of the curve and offer more generous options for workers.

If there are concerns surrounding the affordability of such plans, they could be tied to the length of employment or value to the company, although employers will need to be cautious to ensure that they do not discriminate.

Provided an employer is seen to be acting fairly and has a clearly defined paternity leave policy that meets the statutory requirements, then such measures will be compliant with Government guidelines.

We can assist you in determining the best way to manage this issue and assist with the creation of contracts that clearly define the rights of all parents, regardless of the makeup of the family.

For advice and guidance on supporting your employees, speak to our team today.

Essex law firm Palmers Solicitors has promoted Gareth Brazier to Senior Associate, reinforcing its commitment to developing talent from within the practice.

Gareth, who has more than 12 years’ post-qualification experience and two decades in litigation, specialises in a range of civil and commercial disputes.

Chief Operating Officer Gina Newman said, “Since joining Palmers, Gareth has quickly become an indispensable member of our team.

“In recent months, he has taken on an increasing range of responsibilities, including supporting colleagues across supervisory matters.

“His new role will see him further expand those duties, serving as a key point of contact for the team on specific case types and projects.

“This promotion is a reflection of everything Gareth has brought to the team so far, and the key role we see him playing in the department’s future.”

Gareth will continue to support complex dispute resolution work, while helping to develop internal processes and mentoring colleagues as part of the firm’s wider growth plans.

Speaking about his promotion, Gareth said, “I’m really pleased to be taking on this role. Palmers has a strong culture of supporting its people, and I’m grateful for the trust placed in me.

“I’m looking forward to continuing to work closely with the team and helping to drive the department forward.”

The promotion forms part of the firm’s strategy of investing in internal talent and leadership development as it continues to expand its service offering across Essex and the wider South East.

As an employment law solicitor, I’ve been closely following the evolving trends around hybrid working, and the latest figures from the Office for National Statistics (ONS) caught my attention.

Between January and March 2025, 28 per cent of adults worked on a hybrid basis, up from 25 per cent the previous year.

This ongoing transition to hybrid work brings real opportunities for flexibility, productivity and work-life balance for employees across the country.

However, it also raises significant legal considerations that many employers risk overlooking, especially when hybrid arrangements are offered more readily to some staff than others.

What do the latest figures from ONS reveal?

The ONS data shows that workers with a degree or equivalent qualification are ten times more likely to be in hybrid roles than those with no qualifications.

Higher earners and professionals aged 30 to 49 also appear to dominate the hybrid workforce.

While this may reflect the nature of certain roles, it also flags potential legal issues if access to hybrid working becomes linked (even indirectly) to protected characteristics such as age or sex.

It was also found that “almost 9 out of 10 workers with a “degree or equivalent” worked in one of four occupation groups:

• Managers, directors and senior officials
• Professional occupations
• Associate professional occupations
• Administrative and secretarial occupations

These were the top four occupation groups where hybrid work was most common, which may give those who hold these educational qualifications greater access to hybrid work.”

When might employers be at risk of facing discrimination claims?

Whilst it is clear that some roles cannot be suitable for hybrid working because the work cannot be undertaken remotely, e.g. some care, customer service or construction roles, employers should ensure that they do not discriminate against employees.

This could be by requiring a minimum seniority level or pay grade to consider hybrid working, with no objective justification for this requirement.

Indirect discrimination occurs where a workplace has rules or arrangements in place that apply to everyone, yet put a certain category of people at an unfair disadvantage, and the employer cannot show that the rules or arrangements are a proportionate means of achieving a legitimate aim.

Direct discrimination occurs where “because of a protected characteristic, A treats B less favourably than A treats or would treat others”.

A protected characteristic in this case could be age, for example. If an employee is not permitted to undertake hybrid working because of their age, this could amount to direct age discrimination.

If employers allow hybrid working for some roles but not for others or for some employees but not others, employers should keep a clear record of the reasoning why hybrid working is not appropriate for the roles or employees for which it is not permitted.

Employers should consider the content of their contracts and hybrid working policies regularly to ensure that they reflect the reality of the situation.

The return to the office

Several large and high-profile employers have recently mandated that employees must return to the office to work for at least a specified number of days per week e.g. 3 days per week. Employers should check that their contracts allow this.

PwC has made clear that it believes that 3 days per week is required in the office to enable the training of more junior members of staff.

It may be that younger workers on lower pay are undertaking training, and for this, it may be better for them to be based in the office.

However, employers should keep a clear record of this reasoning if this is the case. They should also keep the situation under review.

Many employees prefer to hybrid work and employers should consider this before mandating that employees should return to the office completely or for an increasing number of days as this could affect their staff retention.

Hybrid working support with Palmers Solicitors

Whilst hybrid working is not suitable for all employees, it is something employers should consider both in respect of whether to allow it and if not, the reasons why.

At Palmers Solicitors, we have the expertise needed to help you implement hybrid working policies that balance the needs of your business with the welfare of your employees.

Our employment law specialists have a wealth of experience in helping employers like you remain compliant with your legal obligations, reducing the risk of potentially costly employment disputes and discrimination claims.

Should any issues arise, you can count on us for the best advice, guidance, and representation on all employment law matters.

If you have any questions or concerns about hybrid working policies, please get in touch with our employment law team today.

There are a number of reasons why you might want to buy back your company’s own shares.

You may wish to buy out shareholders looking to exit the business, wish to return surplus cash to shareholders, or improve earnings per share ratio.

However, as with any transaction, there are a number of factors you need to consider before moving forward.

Things to consider before buying back your company’s shares

A key element to consider before buying back your company’s shares is whether the transaction is permitted in the Articles of Association.

If the articles contain a restriction or prohibition against buybacks, your purchase will not be permitted. There must also be express permission in the articles if you intend to use the de minimis exemption.

You will also need to comply with (or, alternatively, waive) any pre-emption rights in the company’s articles or any shareholders agreement. Otherwise, pre-emption rights can be amended or removed prior to the buyback taking place.

As a minimum, the share buyback contract should set out the main terms of the transaction, including the name of the selling shareholder(s), the number/class of shares being sold, and the price to be paid.

Additionally, your company can only buy back shares that are fully paid. At least one non-redeemable share must remain in issue after the buyback has taken place.

Other factors you need to consider include:

• Approval:A share buyback must be approved by the company’s members, either by written resolution or a resolution in a general meeting. A member holding the shares being acquired is not an eligible and cannot vote on the resolution relating to their share buyback.
• Payment: Statute requires any shares bought by a company as part of a share buyback to be paid for at the time they are purchased. This principle of “cash on completion” means that it is not possible for the payment to be deferred or paid in instalments.
• Multiple buybacks: If you can’t pay for the shares in one go on completion, then it is possible for a buyback contract to provide for a number of buybacks in stages or tranches. If the buyback is funded out of distributable profits, then the company must have sufficient distributable profits to pay for each individual tranche of shares at the time of each buyback.

Cancel shares or hold in treasury?

Shares that are the subject of a buyback can be cancelled or held in treasury.

Treasury is a “share storage” where the shares are held by the company itself (the company needs to be registered as the holder of the treasury shares).

Those shares can be transferred or sold by the company at a later date rather than being cancelled. Holding shares in treasury is only possible if the buyback has been done out of distributable profits.

The company holds the treasury shares but cannot exercise voting rights and is not entitled to any dividends or capital distributions, if any are made by the company. Shares held in treasury can be cancelled at any time.

The company may transfer the treasury shares at any time for cash consideration unless the transfer is pursuant to an employee share scheme, in which case consideration is not required.

Any treasury shares sold this way are treated, for tax purposes, as if they were freshly issued shares and generally therefore don’t attract stamp duty on the initial resale.

Stamp duty treatment on the buyback is the same for shares held in treasury as it is with shares which are subsequently cancelled.

 Make sure you meet your statutory obligations

Following the buyback, you should attend to the payment of any relevant stamp duty, the relevant filings at Companies House, and the updating of the company’s statutory books, including any required changes to the PSC register (Persons with significant control).

Ensuring you comply with the statutory requirements of a buyback will allow you to move forward in the full knowledge that there is no comeback on the company or its directors and will enable you to draw a line under the process.

The last thing you want is to have to incur the time and expense of unravelling a void transaction!

At Palmers Solicitors, our Corporate and Commercial lawyers will make sure no stone is left unturned in your share buyback.

With a wealth of experience advising businesses just like yours, we can support you with all aspects of your commercial transactions.

For tailored advice and guidance on buying back your company’s shares, please get in touch.