Personal Guarantees, and What Signing One Commits You To
Last updated: September 2026
A personal guarantee is a separate promise by a director to pay the lease personally if the company does not.
It survives the company being wound up, which is precisely why financiers ask for one.
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Quick formA guarantee, in plain words
The lease itself is between the financier and the company. A guarantee sits alongside it and is between the financier and you.
If the company does not pay, the financier can pursue the guarantor personally for the shortfall.
Because it is a separate promise, it does not disappear when the company does.
When one is normally asked for
- A company that has been trading for a short time and has limited financial history.
- A newly formed entity, including one set up to buy an existing business.
- An agreement whose value is large relative to the size of the business.
- A sole director company, where the financier has one party to look to in any case.
Four things to check before you sign
- Whether it is capped at a figure or unlimited. Many are unlimited by default.
- Whether it covers this agreement only, or all present and future obligations to that financier.
- What releases it, and whether that release has to be in writing. It almost always does.
- Whether a co director is signing as well, and whether liability is joint, meaning the financier can pursue either of you for the whole amount.
Getting released from one
A guarantee is released when the financier agrees in writing, and generally not before.
Selling the business does not release it on its own, which is an assumption worth testing early.
Settling the agreement in full normally does, but ask for written confirmation rather than assuming.
This page is general information about how these arrangements generally work in Australia, not legal advice. A guarantee is a personal financial commitment, so have one reviewed before signing.
Common questions
What is a personal guarantee on an equipment lease?
It is a separate promise by a director to pay the lease personally if the company does not.
The lease is with the company.
The guarantee is with you, which is why it survives the company being wound up.
Do I have to give a personal guarantee to lease a printer?
Not always.
It is more commonly asked for where the company has a short trading history or is newly formed.
It is also asked where the agreement is large relative to the size of the business.
Is a personal guarantee capped?
Sometimes, but many are unlimited by default.
Two things are worth checking first: whether it is capped, and whether it covers this agreement only or all future obligations to the same financier.
How do I get released from a personal guarantee?
The financier has to agree in writing.
Settling the agreement in full normally achieves it, but selling the business does not release you on its own.
Ask for written confirmation rather than assuming.